At the time of this post FANG was trading at $127.63. TipRanks' Price Target is $180.50.
Two respected and conservative analysts updated their price targets this morning to $191 and $200
I have updated my forecast/valuation model for FANG's outstanding Q2 results and their fresh guidance. My valuation increases by $10 to $240.
Why?
> FANG is in our High Yield Income Portfolio. Its Fixed + Variable dividend for Q2 is $3.05/share for annualized yield of ~9.6%
> Based on my forecast, the Company should generate close to $5 billion of FCF from operations this year and can increase the dividend.
> FANG was an "Aggressive Growth" company (24.9% YOY production growth in 2021) that is now committed to low single-digit production grow to focus on HUGE FCF generation. < It is one of my best all-time picks for our Sweet 16.
> It holds a lot of extremely valuable low-risk / high-return development drilling inventory, so "Running Room" is HIGH for this one.
> Because the confidence that I have if my forecast model for FANG is VERY HIGH, I have increased my valuation multiple from 6.5 to 7.0 X annualized operating cash flow per share.
> PLUS the Company now has an aggressive stock repurchase plan underway that will push per share results even higher in 2023.
My Opinion: FANG has an A+ Safety Rating for dividend yield + significant stock price appreciation potential.
Diamondback Energy (FANG) Valuation Update - Aug 2
Diamondback Energy (FANG) Valuation Update - Aug 2
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Diamondback Energy (FANG) Valuation Update - Aug 2
Note from Stifel
Diamondback Energy, Inc. (FANG, $125.92, Buy; Target $206.00) - Diamondback
increases its shareholder return program while delivering in line operational results - Derrick Whitfield
- We view this release as positive. The positives include: i)
an adjusted EBITDA beat (3.1% above consensus) driven by higher-than-expected
realizations, total equivalent volumes (1.0% above consensus), lower cash costs
(5.1% below Stifel), ii) a $2.0 billion increase to authorized share repurchase program
($3.1 billion remaining, or ~14% of the company's current market cap), iii) continued
debt reduction (net debt decreased 5% q/q), and iv) a better-than-expected FY22
guide (oil volume guidance in line with consensus, capex 2.0% below consensus). If
we stretch for a negative, we note that FY22 LOE guidance increased by 11.8% due
to increases in power costs in Texas. Net-net, the company continues to execute and
increase its return of capital program while delivering production volumes and capital
spend in line with Street expectations.
Diamondback Energy, Inc. (FANG, $125.92, Buy; Target $206.00) - Diamondback
increases its shareholder return program while delivering in line operational results - Derrick Whitfield
- We view this release as positive. The positives include: i)
an adjusted EBITDA beat (3.1% above consensus) driven by higher-than-expected
realizations, total equivalent volumes (1.0% above consensus), lower cash costs
(5.1% below Stifel), ii) a $2.0 billion increase to authorized share repurchase program
($3.1 billion remaining, or ~14% of the company's current market cap), iii) continued
debt reduction (net debt decreased 5% q/q), and iv) a better-than-expected FY22
guide (oil volume guidance in line with consensus, capex 2.0% below consensus). If
we stretch for a negative, we note that FY22 LOE guidance increased by 11.8% due
to increases in power costs in Texas. Net-net, the company continues to execute and
increase its return of capital program while delivering production volumes and capital
spend in line with Street expectations.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group