Diamondback Energy Faces Pressure Amid Falling Oil Prices
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6d ago
0mins
Should l Buy FANG?
Source: Benzinga
Diamondback Energy Inc (FANG) saw its stock price increase by 3.45%, reaching a 52-week high. However, this rise comes amid broader market weakness, with the Nasdaq-100 down 1.95% and the S&P 500 down 0.64%.
The energy sector is currently under pressure as WTI crude oil prices fell more than 4%, raising concerns about demand. Despite Diamondback's recent price increase, the overall sentiment in the energy market remains cautious, particularly following the decline in oil prices which has affected many energy producers. This situation reflects a sector rotation, as investors shift focus away from energy stocks in light of the recent market trends.
The implications for Diamondback Energy suggest that while the stock has reached a new high, the underlying pressures from the oil market could lead to volatility. Investors may need to monitor oil price trends closely as they could significantly impact future performance.
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Analyst Views on FANG
Wall Street analysts forecast FANG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for FANG is 179.35 USD with a low forecast of 150.00 USD and a high forecast of 219.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
21 Analyst Rating
20 Buy
1 Hold
0 Sell
Strong Buy
Current: 164.780
Low
150.00
Averages
179.35
High
219.00
Current: 164.780
Low
150.00
Averages
179.35
High
219.00
About FANG
Diamondback Energy, Inc. is an independent oil and natural gas company, focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. The Company's activities are primarily directed at the horizontal development of the Wolfcamp and Spraberry formations in the Midland Basin and the Wolfcamp and Bone Spring formations in the Delaware Basin within the Permian Basin. Its subsidiary, Viper Energy, Inc., is focused on owning and acquiring mineral interests and royalty interests in oil and natural gas properties primarily in the Permian Basin and derives royalty income and lease bonus income from such interests. The Company has approximately 859,203 net acres, which primarily consists of 742,522 net acres in the Midland Basin and 116,681 net acres in the Delaware Basin. Its subsidiaries include Diamondback E&P LLC, Rattler Midstream GP LLC, Rattler Midstream LP and QEP Resources, Inc.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Verde Suspends Permian Basin Project Development Amid Market Changes
- Project Suspension Reason: Verde Clean Fuels, Inc. announced the suspension of its Permian Basin project development primarily due to changing market conditions, particularly the increasing demand for natural gas in the region, indicating the company's responsiveness to market dynamics.
- Joint Development Agreement Context: In February 2024, Verde entered into a joint development agreement with Cottonmouth Ventures, a wholly-owned subsidiary of Diamondback Energy, to develop a natural gas-to-gasoline plant utilizing Verde's STG+® technology, although the project is now on hold, the partnership remains strong.
- Future Technology Applications: Despite the suspension of the Permian Basin project, Verde plans to redirect resources towards other regions where natural gas is stranded or flared, continuing to explore opportunities for deploying its technology, showcasing the company's strategic flexibility in the clean fuels sector.
- Shareholder Support: Cottonmouth remains Verde's second-largest shareholder and supports the company's ongoing efforts to deploy its technology, reflecting shareholder confidence in the company's future and the importance of transitioning to clean energy.
See More
Diamondback Energy Stock Breakout
- Shareholder Return Commitment: Diamondback Energy is committed to returning at least 50% of quarterly free cash flow to shareholders, having returned $892 million through dividends and share buybacks by Q3, showcasing strong cash flow management.
- Stable Dividend Growth: Since initiating its dividend in 2018, FANG has grown its payout by 7.2% annually, currently offering a 2.42% annual yield, alongside an $8 billion share buyback authorization, reflecting the company's ongoing commitment to shareholders.
- Cost Structure Advantage: With a breakeven price of $30 per barrel and a dividend maintenance price of $37, significantly below the current $65 oil price, FANG demonstrates its ability to remain profitable even in low oil price environments, enhancing its competitive edge.
- Strong Technicals: FANG trades above both the 50-day and 200-day moving averages, indicating robust upward momentum, with the next key resistance around $170-$172; a breakout here would further solidify its market position.
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US Stocks Close Higher on Strong Manufacturing Data
- Manufacturing Index Surge: The US January ISM manufacturing index rose by 4.7 to 52.6, surpassing expectations of 48.5, marking the strongest expansion in over 3.25 years, which bolstered market optimism and contributed to stock gains.
- Chip Stocks Rally: Chipmakers and AI infrastructure stocks performed strongly on Monday, with Sandisk (SNDK) surging over 15% to lead the S&P 500 gainers, reflecting strong demand for tech stocks and a recovery in investor confidence.
- Energy Stocks Under Pressure: Energy producers faced headwinds as WTI crude oil prices fell more than 4%, with Diamondback Energy (FANG) and Occidental Petroleum (OXY) both declining over 3%, indicating growing concerns in the energy sector.
- Cryptocurrency Market Retreats: Bitcoin plummeted over 7% to a 9.75-month low, leading to widespread declines in cryptocurrency-related stocks, with Galaxy Digital Holdings (GLXY) and Strategy (MSTR) both dropping over 6%, reflecting weakened investor confidence in the crypto market.
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Goldman Sachs and Broadcom Investment Outlook Positive
- Goldman Sachs Advisory Role: Goldman Sachs has been appointed as the financial advisor for Coterra's $58 billion all-stock merger with Devon, marking the largest deal in the energy sector since Diamondback's $26 billion acquisition of Endeavor in 2024, thereby reinforcing Goldman's position in investment banking, which accounted for 15% of its overall revenue last year.
- M&A Activity Boost: CEO David Solomon stated that M&A transactions often trigger a flywheel of activity across the entire franchise, and the ongoing deal news further validates the initial bullish thesis on Goldman’s stock, which has risen 7.6% year-to-date, significantly outperforming the S&P 500's 1.5% increase.
- Broadcom Earnings Potential: Mizuho analysts recommend buying Broadcom on its recent pullback, citing an acceleration in earnings potential from multiple custom chip business opportunities in the coming year, despite Broadcom shares being down nearly 20% from their December peak, indicating strong growth prospects ahead.
- Price Target and Rating: Mizuho maintains a buy-equivalent rating on Broadcom with a price target of $480, implying a 44% upside from the current price of around $332, although the investment club prefers to wait for a further pullback before upgrading its rating to buy.
See More
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- Market Recovery: The S&P 500 index rose by 0.39%, the Dow Jones Industrial Average increased by 0.84%, and the Nasdaq 100 climbed by 0.64%, reflecting positive market sentiment driven by strong economic signals, particularly following the expansion of the manufacturing index.
- Rare Earth Stocks Surge: President Trump's plan to launch a $12 billion strategic stockpile of critical minerals to reduce reliance on China has led to a rise in US rare earth stocks, with USA Rare Earth up over 12% and United States Antimony Corp up over 6%, indicating a positive impact from supportive policies on the sector.
- Energy Stocks Under Pressure: WTI crude oil prices fell by more than 4%, primarily due to easing geopolitical risks, putting pressure on energy producers, with companies like ConocoPhillips and Chevron seeing declines of over 2%, reflecting market concerns about energy demand prospects.
- Cryptocurrency Market Retreats: Bitcoin prices dropped over 7% to a 9.75-month low, leading to widespread declines in cryptocurrency-related stocks, with Galaxy Digital Holdings down more than 4%, highlighting a weakening market confidence in crypto assets.
See More
US Stocks Rise Slightly as Chip Stocks Rebound
- Chip Stock Rebound: The S&P 500 index rose by 0.25% as chip makers and AI infrastructure stocks rebounded from last Friday's losses, indicating a renewed market confidence in tech stocks that could drive overall market gains.
- Rare Earth Stocks Surge: President Trump's plan to launch a $12 billion strategic stockpile of critical minerals to reduce reliance on China has led to a surge in US rare earth stocks, with USA Rare Earth up over 9%, highlighting the positive impact of policy support on related industries.
- Energy Stocks Under Pressure: WTI crude oil prices fell by more than 4% due to easing geopolitical risks, putting pressure on energy producers like ConocoPhillips and Chevron, which saw declines of over 2%, reflecting market concerns about energy demand.
- Weakness in China's Economy: China's January manufacturing PMI unexpectedly dropped to 49.3, indicating signs of economic slowdown, with the Shanghai Composite Index falling over 2%, which could negatively impact global growth prospects, prompting investors to closely monitor upcoming data.
See More
Verde Suspends Permian Basin Project Development Amid Market Changes
- Project Suspension Reason: Verde Clean Fuels, Inc. announced the suspension of its Permian Basin project development primarily due to changing market conditions, particularly the increasing demand for natural gas in the region, indicating the company's responsiveness to market dynamics.
- Joint Development Agreement Context: In February 2024, Verde entered into a joint development agreement with Cottonmouth Ventures, a wholly-owned subsidiary of Diamondback Energy, to develop a natural gas-to-gasoline plant utilizing Verde's STG+® technology, although the project is now on hold, the partnership remains strong.
- Future Technology Applications: Despite the suspension of the Permian Basin project, Verde plans to redirect resources towards other regions where natural gas is stranded or flared, continuing to explore opportunities for deploying its technology, showcasing the company's strategic flexibility in the clean fuels sector.
- Shareholder Support: Cottonmouth remains Verde's second-largest shareholder and supports the company's ongoing efforts to deploy its technology, reflecting shareholder confidence in the company's future and the importance of transitioning to clean energy.
See More
Diamondback Energy Stock Breakout
- Shareholder Return Commitment: Diamondback Energy is committed to returning at least 50% of quarterly free cash flow to shareholders, having returned $892 million through dividends and share buybacks by Q3, showcasing strong cash flow management.
- Stable Dividend Growth: Since initiating its dividend in 2018, FANG has grown its payout by 7.2% annually, currently offering a 2.42% annual yield, alongside an $8 billion share buyback authorization, reflecting the company's ongoing commitment to shareholders.
- Cost Structure Advantage: With a breakeven price of $30 per barrel and a dividend maintenance price of $37, significantly below the current $65 oil price, FANG demonstrates its ability to remain profitable even in low oil price environments, enhancing its competitive edge.
- Strong Technicals: FANG trades above both the 50-day and 200-day moving averages, indicating robust upward momentum, with the next key resistance around $170-$172; a breakout here would further solidify its market position.
See More
US Stocks Close Higher on Strong Manufacturing Data
- Manufacturing Index Surge: The US January ISM manufacturing index rose by 4.7 to 52.6, surpassing expectations of 48.5, marking the strongest expansion in over 3.25 years, which bolstered market optimism and contributed to stock gains.
- Chip Stocks Rally: Chipmakers and AI infrastructure stocks performed strongly on Monday, with Sandisk (SNDK) surging over 15% to lead the S&P 500 gainers, reflecting strong demand for tech stocks and a recovery in investor confidence.
- Energy Stocks Under Pressure: Energy producers faced headwinds as WTI crude oil prices fell more than 4%, with Diamondback Energy (FANG) and Occidental Petroleum (OXY) both declining over 3%, indicating growing concerns in the energy sector.
- Cryptocurrency Market Retreats: Bitcoin plummeted over 7% to a 9.75-month low, leading to widespread declines in cryptocurrency-related stocks, with Galaxy Digital Holdings (GLXY) and Strategy (MSTR) both dropping over 6%, reflecting weakened investor confidence in the crypto market.
See More
Goldman Sachs and Broadcom Investment Outlook Positive
- Goldman Sachs Advisory Role: Goldman Sachs has been appointed as the financial advisor for Coterra's $58 billion all-stock merger with Devon, marking the largest deal in the energy sector since Diamondback's $26 billion acquisition of Endeavor in 2024, thereby reinforcing Goldman's position in investment banking, which accounted for 15% of its overall revenue last year.
- M&A Activity Boost: CEO David Solomon stated that M&A transactions often trigger a flywheel of activity across the entire franchise, and the ongoing deal news further validates the initial bullish thesis on Goldman’s stock, which has risen 7.6% year-to-date, significantly outperforming the S&P 500's 1.5% increase.
- Broadcom Earnings Potential: Mizuho analysts recommend buying Broadcom on its recent pullback, citing an acceleration in earnings potential from multiple custom chip business opportunities in the coming year, despite Broadcom shares being down nearly 20% from their December peak, indicating strong growth prospects ahead.
- Price Target and Rating: Mizuho maintains a buy-equivalent rating on Broadcom with a price target of $480, implying a 44% upside from the current price of around $332, although the investment club prefers to wait for a further pullback before upgrading its rating to buy.
See More
US Stocks Rise as Chip and Rare Earth Stocks Rebound
- Market Recovery: The S&P 500 index rose by 0.39%, the Dow Jones Industrial Average increased by 0.84%, and the Nasdaq 100 climbed by 0.64%, reflecting positive market sentiment driven by strong economic signals, particularly following the expansion of the manufacturing index.
- Rare Earth Stocks Surge: President Trump's plan to launch a $12 billion strategic stockpile of critical minerals to reduce reliance on China has led to a rise in US rare earth stocks, with USA Rare Earth up over 12% and United States Antimony Corp up over 6%, indicating a positive impact from supportive policies on the sector.
- Energy Stocks Under Pressure: WTI crude oil prices fell by more than 4%, primarily due to easing geopolitical risks, putting pressure on energy producers, with companies like ConocoPhillips and Chevron seeing declines of over 2%, reflecting market concerns about energy demand prospects.
- Cryptocurrency Market Retreats: Bitcoin prices dropped over 7% to a 9.75-month low, leading to widespread declines in cryptocurrency-related stocks, with Galaxy Digital Holdings down more than 4%, highlighting a weakening market confidence in crypto assets.
See More
US Stocks Rise Slightly as Chip Stocks Rebound
- Chip Stock Rebound: The S&P 500 index rose by 0.25% as chip makers and AI infrastructure stocks rebounded from last Friday's losses, indicating a renewed market confidence in tech stocks that could drive overall market gains.
- Rare Earth Stocks Surge: President Trump's plan to launch a $12 billion strategic stockpile of critical minerals to reduce reliance on China has led to a surge in US rare earth stocks, with USA Rare Earth up over 9%, highlighting the positive impact of policy support on related industries.
- Energy Stocks Under Pressure: WTI crude oil prices fell by more than 4% due to easing geopolitical risks, putting pressure on energy producers like ConocoPhillips and Chevron, which saw declines of over 2%, reflecting market concerns about energy demand.
- Weakness in China's Economy: China's January manufacturing PMI unexpectedly dropped to 49.3, indicating signs of economic slowdown, with the Shanghai Composite Index falling over 2%, which could negatively impact global growth prospects, prompting investors to closely monitor upcoming data.
See More
