On Friday, Diamondback Energy (NASDAQ:FANG) received a boost from Stifel with a significant increase in its price target. The firm now sees the stock reaching $224.00, up from the previous target of $192.00, while reiterating its Buy rating.
The adjustment comes as Stifel updated its model to reflect Diamondback Energy's reported quarterly results and revised guidance. The firm anticipates a healthier forward Net Debt to EBITDAX ratio for the company, projecting it to be 1.6x in the estimated year 2024 and improving to 0.7x by 2026.
Stifel's optimism is further fueled by the expectation that Diamondback Energy will generate positive free cash flows in the coming years. The company is also projected to deliver a compound annual growth rate (CAGR) of 24% in production from the estimated year 2024 through 2026.
The new price target of $224.00 per share represents a 20% discount to Stifel's calculated net asset value (NAV) of Diamondback Energy, which stands at $280.18 per share. This NAV-based assessment underpins the firm's confidence in the energy company's operational and financial trajectory.
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