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Mizuho raises Diamondback Energy stock target on Endeavor deal

EditorNatashya Angelica
Published 04/11/2024, 12:02 PM

On Thursday, Mizuho Securities adjusted its outlook on Diamondback Energy (NASDAQ:FANG), increasing the stock's price target from $200 to $217, while maintaining a Buy rating. The adjustment comes amid expectations that Diamondback Energy could finalize its acquisition of Endeavor Energy Resources sooner than initially anticipated.

The analyst at Mizuho highlighted the strong performance of Diamondback Energy's stock, which has seen a significant rise of approximately 35% since the beginning of the year. The focus for investors has been on the potential benefits of the Endeavor deal.

The new price target is based on a net asset value (NAV) that incorporates year-end 2023 reserves estimates for Endeavor at around 950 million barrels of oil equivalent (mmboe), an increase from the previous estimate of 740 mmboe.

The recent 8-K filing by Diamondback Energy, dated April 8, 2024, was noted as outlining a possible timeline for the completion of the Endeavor transaction. A key milestone is the upcoming shareholder vote scheduled for April 26, 2024. According to Mizuho's analysis, this development could see the deal closing in the second quarter of 2024, although their base case still assumes a closure by the end of the year.

Diamondback Energy's strategic move to acquire Endeavor Energy Resources is seen as a significant step in consolidating its position in the energy sector. The increased reserves estimate and the potential acceleration of the deal's closure are key factors contributing to the positive outlook reflected in the raised price target.

The transaction's progress will likely continue to be a central point of interest for Diamondback Energy's investors and the market at large.

InvestingPro Insights

As Diamondback Energy (NASDAQ:FANG) garners attention with its strategic acquisition of Endeavor Energy Resources and its stock's impressive year-to-date performance, InvestingPro metrics provide a detailed snapshot of the company's financial health.

With a market capitalization of $36.8 billion and a P/E ratio standing at 11.9, Diamondback Energy's valuation reflects a market that has faith in its profitability, as evidenced by the last twelve months as of Q4 2023. The company's revenue growth for the same period, however, did show a decline of 12.37%, but a quarterly uptick of 11.26% suggests a potential rebound.

InvestingPro Tips highlight that analysts have recently revised their earnings upwards for the upcoming period, indicating optimism about the company's future performance. Additionally, the stock is trading near its 52-week high, which aligns with the positive sentiment seen in the market and the recent price target increase by Mizuho Securities.

It is worth noting that while the Relative Strength Index (RSI) suggests that the stock is in overbought territory, this could be a reflection of the strong investor confidence following the news of the Endeavor acquisition.

For investors looking for a deeper dive into Diamondback Energy's prospects, InvestingPro offers additional insights. With the use of coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 15 more InvestingPro Tips available that can help investors make informed decisions about their investments in Diamondback Energy.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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