Assessing Diamondback Energy (FANG) Valuation After Morgan Stanley’s Endorsement and New Capital Return Moves

Morgan Stanley is doubling down on its positive view of Diamondback Energy (FANG), pointing to its low cost Permian wells, rising free cash flow, and a capital plan that leans heavily toward shareholder payouts.

See our latest analysis for Diamondback Energy.

That backdrop helps explain why, even with the latest share price at $157.52, Diamondback’s 30 day share price return of 9.66% and 90 day gain of 15.58% suggest momentum is rebuilding. At the same time, a 5 year total shareholder return of 314.42% still points to a strong long term wealth story.

If Diamondback’s mix of cash returns and growth potential has your attention, this could be a good moment to explore fast growing stocks with high insider ownership as you scout for the market’s next standouts.

With the shares trading at a mid single digit discount to Wall Street targets but a hefty intrinsic value gap implied by cash flows, investors must ask: is Diamondback still a buy, or is the market already pricing in its next leg of growth?

Most Popular Narrative Narrative: 12% Undervalued

With the narrative fair value near $179 against a $157.52 last close, the story leans toward upside and puts its core growth logic in focus.

The analysts have a consensus price target of $182.0 for Diamondback Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $222.0 and the most bearish reporting a price target of just $143.0.

Read the complete narrative.

Curious how modest top line growth, steady margins and a richer future earnings multiple can still add up to upside from here? The narrative walks through a tight set of revenue, profit and valuation assumptions that paint a very different picture from today’s market pricing.

Result: Fair Value of $179.03 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising operating costs and potential declines in well productivity could pressure margins and free cash flow, which may challenge the upside case if oil prices soften.

Find out about the key risks to this Diamondback Energy narrative.

Build Your Own Diamondback Energy Narrative

If you want to stress test these assumptions yourself and dig into the numbers directly, you can build a personalized view in just a few minutes: Do it your way

A great starting point for your Diamondback Energy research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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