The analyst firm set a price target of $91 for the oil company. Keybanc set its 2015 and 2016 EPS estimates for Diamondback Energy at $1.63 a share and $2.66 a share, respectively.
Keybanc analysts said the company's true growth potential isn't reflected in its shares, especially since the analyst firm's production guidance is 19% above consensus.
"FANG is the most efficient operator in the Permian Basin, has the best balance sheet, and offers investors the fastest 3-year production growth CAGR (45%: 2015-2017 vs. 25% peers) supported by the highest quality acreage in the Permian Basin (based on weighted average IRR of inventory) and its mineral/royalty ownership (through an 88% stake in VNOM)," Keybanc analysts wrote.
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. At the same time, however, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite the weak revenue results, FANG has outperformed against the industry average of 34.8%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- DIAMONDBACK ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DIAMONDBACK ENERGY INC increased its bottom line by earning $3.54 versus $1.26 in the prior year. For the next year, the market is expecting a contraction of 55.9% in earnings ($1.56 versus $3.54).
- The share price of DIAMONDBACK ENERGY INC has not done very well: it is down 10.24% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 864.9% when compared to the same quarter one year ago, falling from $27.75 million to -$212.29 million.
- You can view the full analysis from the report here: FANG Ratings Report