DEC: Shares Should Benefit From Gas Price Upside And Recent Acquisition

Analysts have lowered their price target for Diversified Energy from $19.31 to $16.38 per share. This adjustment is due to reduced forecasts for revenue growth and profit margins, partly offset by the recent acquisition of Canvas Energy and updated commodity price expectations.

Analyst Commentary

Recent research notes provide a mix of optimism and caution among analysts following Diversified Energy. Updates to financial models and price targets reflect adjustments after the Canvas Energy acquisition and changes in commodity price outlooks.

• Bullish analysts have increased forward estimates for revenue and adjusted EBITDA, citing the Canvas Energy acquisition as a catalyst for improved top and bottom line growth.
• Updated guidance suggests a significant boost in FY26 revenue and profitability, reinforcing expectations for operational scale and cost efficiency.
• Positive long-term sentiment remains around natural gas prices, with forecasts indicating a potential upside for gas-focused producers.
• The company is positioned as an attractive play among large-cap explorers and producers with exposure to favorable natural gas market dynamics.

• Bears point to the industry's broader headwinds, such as commodity price volatility and evolving macroeconomic factors, which could pressure valuations.
• Some analysts have reduced their price targets amid a recalibration of sector-wide outlooks and updated valuation models.
• There is ongoing caution regarding execution risk as Diversified Energy integrates its recent acquisition and strives to achieve projected synergies.
• Despite an overall positive view, the company’s shares are seen to have already priced in much of the current commodity strip, limiting near-term multiple expansion.

What's in the News

• Diversified Energy reported third quarter 2025 production of 1,127 MMcfepd, a significant increase from 829 MMcfepd in the previous year. Nine-month production totaled 1,048 MMcfepd, up from 774 MMcfepd a year ago. (Key Developments)
• The company reiterated its 2025 production guidance and expects total production between 1,050 and 1,100 MMcfepd, with a consistent mix of 75% natural gas and 25% liquids. (Key Developments)
• From January 1 to November 3, 2025, Diversified Energy repurchased 5,100,000 shares, representing 9.94% of outstanding shares, for $61 million under an ongoing buyback. A total of 6,866,632 shares have been repurchased since June 2023. (Key Developments)
• A Special/Extraordinary Shareholders Meeting has been scheduled for November 10, 2025 to address approval of the 2025 Equity Incentive Plan and considerations related to the Scheme of Arrangement. (Key Developments)
• The company completed a follow-on equity offering in the amount of $78.56 million, issuing 5,713,353 ordinary shares at a price of $13.75 per share. (Key Developments)

Valuation Changes

• Consensus Analyst Price Target has fallen significantly from $19.31 to $16.38 per share. This reflects updated expectations for the company’s fair value.
• Discount Rate has decreased modestly from 9.41% to 9.21%, suggesting slightly lower perceived risk in the valuation model.
• Revenue Growth forecast has moved lower from 17.78% to 13.75%, indicating reduced expectations for top-line expansion.
• Net Profit Margin projection has declined noticeably from 16.53% to 11.93%, pointing to more conservative profitability assumptions.
• Future P/E ratio estimate has risen from 10.17x to 13.30x. This signals that shares now trade at a higher multiple of anticipated earnings.