Analyst Kalei Akamine of Bank of America Securities maintained a Buy rating on Diamondback, retaining the price target of $176.00.
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Kalei Akamine has given his Buy rating due to a combination of factors that highlight Diamondback’s strong financial and operational performance. The company exceeded expectations in oil production, achieving 504 thousand barrels per day, which was higher than Bank of America’s estimate. Despite facing higher lease operating expenses, Diamondback’s capital expenditure was managed efficiently, coming in below the midpoint of guidance and significantly below Bank of America’s forecast. This efficient capital management resulted in substantial free cash flow, enabling the company to execute its largest quarterly share buyback in history.
Additionally, Diamondback’s strategic asset divestitures, including the sale of its interest in EPIC and the acquisition of Sitio, have positioned the company well to meet its non-core asset sale targets. Although net debt increased, this was primarily due to timing issues related to these transactions, which are expected to close soon. The company’s guidance for the fourth quarter aligns with expectations, and its ability to maintain a strong balance sheet while navigating a challenging macroeconomic environment further supports the Buy rating. Diamondback’s defensive positioning and attractive debt-adjusted free cash flow yield make it a preferred choice among its large-cap exploration and production peers.
Based on the recent corporate insider activity of 48 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of FANG in relation to earlier this year.