Diamondback Energy (FANG) Update - June 24

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Diamondback Energy (FANG) Update - June 24

Post by dan_s »

Stifel sent out an updated report this morning comparing all of the upstream oil & gas companies that they cover.
> Stifel ranks FANG a BUY with a price target of $173/share.
> Stifel also estimates that Net Asset Value, including all of their undeveloped leasehold, at $215. Stifel calls it their "NAV P4" valuation.

In the last 3 months, 9 other ranked analysts set 12-month price targets for FANG that range from $125 to $170 per share. The average price target among the analysts is $153.22.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Diamondback Energy (FANG) Update - June 24

Post by dan_s »

Another opinion from Credit Suisse. Note that it is dated 6/17/2019, so it does not include the recent $5/bbl increase in the price of oil.

"We’re reinstating coverage of FANG with an Outperform rating and adding it to our Top Picks. We see FANG upstream trading at 5.0x 2020 EBITDX under strip prices, a ~0.7x discount to large-cap and in-line with Permian E&Ps, vs. 0.4x-1.0x premium historically. The de-rating is unwarranted given sector-leading combo of ~18% YoY production growth and ~4% organic FCF yield in 2020 at strip prices. Importantly, mgmt. is also committed to returning cash to shareholders. With asset sales proceeds, we believe FANG can reduce debt by $700MM, pay a growing dividend (~0.8% currently), and buyback ~$1bn shares in ‘19-‘20 at today’s ~$52/Bbl strip. The total return strategy is also sustainable given high quality inventory. Our $135 TP is based on 5.5x 2020 normalized EBITDX & 0.7x NAV. Risks include oil prices & infra constraints." - Credit Suisse Equity Research June 17, 2019
Dan Steffens
Energy Prospectus Group
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