On Monday, Diamondback Energy (NASDAQ:) shares received a reinstated coverage from Jefferies with a Hold rating and a new stock price target set at $18.00. The firm highlighted Diamondback Energy as the premier pure-play Permian producer, succeeding Pioneer Natural Resources (NYSE:) in this tier.
The analysis pointed to the company’s recent acquisition of Endeavor as a significant improvement, citing Diamondback’s leading operational capabilities as a factor that could enhance the merger’s synergy potential.
The analyst noted that the transformative nature of Diamondback’s latest acquisition is already partly factored into the company’s current market valuation. The market’s attention, according to the firm, is presently on the Stephen family’s stake and the timing of their involvement, which is considered to be a temporary situation.
Diamondback Energy’s strategic move to acquire Endeavor has been recognized as a catalyst for potential growth. The firm’s operations are expected to benefit from the merger, as it allows Diamondback to apply its industry-leading operational practices to a larger asset base, potentially increasing the efficiency and profitability of the combined entity.
The price target of $18.00 suggests a level of caution from Jefferies, reflecting a conservative stance on the stock’s near-term growth prospects. The Hold rating implies that the firm advises investors to maintain their current positions in Diamondback Energy, without making additional investments or divesting their holdings at this time.
Investors and market watchers will likely keep an eye on Diamondback Energy’s performance following the Endeavor acquisition, as well as any changes in the ownership structure related to the Stephen family, to gauge the future direction of the stock.
In other recent news, Viper Energy (NASDAQ:) has announced its acquisition of Tumbleweed Royalty assets for $650 million, a move expected to enhance its position in the Permian Basin. The deal includes a cash component of $461 million and around 10.1 million units of Viper Energy Partners LLC, with additional contingent cash consideration based on 2025 oil prices.
The acquisition is expected to close early in the fourth quarter of 2024. In related news, Viper Energy is also offering 8.5 million shares of its Class A common stock to partially fund the acquisition. Goldman Sachs & Co (NYSE:). LLC, BofA Securities, and Truist Securities are managing the offering.
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