NEW YORK (TheStreet) -- Shares of Diamondback Energy Inc. (FANG) are trading higher 4.37% to $68.50 on Friday, after their target price was raised to a Street-high of $80 from $74 at Mizhuo Financial (MFG).
Mizhuo cites Diamondback's better than expected guidance from Thursday's operation's update as the reason for the target price increase.
The company reported production for Q1 increased 30% quarter over quarter to 13.6 million beo/day, with a quarter-end exit rate in excess of 16 million boe/day.
Full year 2014 production guidance increased 10% to 16 to 18 million boe/day from 15 to 16 million boe/day.
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TheStreet Ratings team rates DIAMONDBACK ENERGY INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DIAMONDBACK ENERGY INC (FANG) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FANG's very impressive revenue growth greatly exceeded the industry average of 7.8%. Since the same quarter one year prior, revenues leaped by 194.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DIAMONDBACK ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIAMONDBACK ENERGY INC turned its bottom line around by earning $1.26 versus -$1.04 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $1.26).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DIAMONDBACK ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.54, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.45 is very low and demonstrates very weak liquidity.
- You can view the full analysis from the report here: FANG Ratings Report