UBS has reaffirmed its Buy recommendation on shares of Diamondback Energy (NASDAQ:FANG), setting a price target of $194.00 ahead of the firm’s anticipated fourth-quarter 2025 earnings release scheduled for February 23. This price target closely matches the stock’s Fair Value metric, indicating that the current trading price of $154.27 may represent an undervaluation.
The investment bank’s positive outlook stems from Diamondback's operational strengths within the Permian Basin, notably highlighted by continued exploration and delineation activities in the Midland Basin sector. Over the past year, the company achieved a nearly 75% gross profit margin coupled with an exceptional revenue increase of 59.7%, underscoring substantial operational efficiencies and growth momentum.
Additionally, UBS noted that Diamondback Energy is advancing its efforts toward reducing debt while sustaining cost advantages relative to other players in the Permian Basin. These factors contribute significantly to the company’s competitiveness especially amidst the current volatility of oil prices, where maintaining low operational expenditures and favorable inventory positions are critical.
UBS underscores that Diamondback’s balance of strong inventory alongside operational cost discipline equips it with resilience during periods of market uncertainty, making it a compelling investment option.
In conjunction with this, Diamondback Energy has recently entered into a noteworthy share repurchase arrangement with SGF FANG Holdings. This agreement grants SGF the option to divest up to 3 million shares per quarter through the end of 2026. As part of its ongoing buyback strategy, Diamondback has committed to repurchasing 2 million shares at a price of $152.59 each.
Following UBS’s reaffirmation, other market analysts have also weighed in with differing valuations. Piper Sandler raised their target price to $215.00, citing the company’s consistent cost leadership and execution, while Bernstein adjusted its price target downward to $190.00, highlighting next year as a decisive period for the oil sector.
Moreover, Diamondback has formed a partnership with Conduit Power aimed at deploying 200 megawatts of natural gas power generation capacity in West Texas. This project is designed to address supply-demand imbalances within the regional power market, aligning with broader operational strategies.