Diamondback Energy (FANG) Valuation Update - Aug 6

[dan_s]

At the time of this post FANG was trading for $189.90

I have updated my forecast/valuation model for FANG for their strong Q2 results and updated production guidance. My valuation increases by $16 to $242.

TipRanks: "In the last 3 months, 15 ranked analysts set 12-month price targets for FANG. The average price target among the analysts is $228.09." < The 15 price targets range from $154 to $286. The analyst with the $154 price target rates FANG a BUY, so his price target shown on TipRanks is a misprint or the analyst is required by his firm to us a very low oil price deck, which he does not believe in.

My 2025 forecast is very close to TipRanks' consensus forecast for next year, which is $15.6 billion of revenues, $20.57 EPS and $34.28 operating cash flow per share. The Wall Street Gang thinks FANG will generate over $10 Billion of operating cash flow in 2025.

I have been following Diamondback for over a decade. It is an American Success Story and "The Best is Yet to Come". The "Mega Merger" with Endeavor Energy could push FANG to over $300 in 2025 if WTI averages $80/bbl and they can get just $2.00 for their gas. < Their realized ngas price was just $1.03 in Q2 2024.

In addition to incredible growth potential, Diamondback pays a nice "Base + Variable" dividend that should be going much higher in 2025. The next quarterly dividend will be $2.34