Piper Sandler Lifts Diamondback Energy Target to $218, Citing Permian Basin Strength Amid Volatile Oil Pricing
Independent oil and gas producer Diamondback Energy (NASDAQ:FANG), a key operator in the prolific Permian Basin of West Texas, received a vote of confidence from Wall Street this week. Investment firm Piper Sandler raised its price target on the company to $218 from $215, reiterating its 'Overweight' rating.
The adjustment, announced January 28, reflects a nuanced view of the energy sector. Piper Sandler's analysis suggests gas-focused companies are poised to report strong fourth-quarter results, buoyed by rising LNG demand. In contrast, oil producers like Diamondback face headwinds from weaker regional pricing at the WAHA hub and softer crude and natural gas liquids (NGL) prices.
This outlook aligns with recent company disclosures. On January 13, Diamondback reported it received lower prices for its oil in Q4 2023 compared to the previous quarter. With crude prices falling 9.2% in the period ending December 31—driven more by oversupply concerns and tariff discussions than geopolitical tensions—Diamondback's average realized oil price dropped to $58.00 per barrel from $64.60.
The trend isn't isolated. Industry giant Exxon Mobil recently warned that similar price softness could slash its upstream earnings by $800 million to $1.2 billion for the quarter. Looking forward, analysts polled by LSEG expect Diamondback to report adjusted earnings of $2.64 per share for Q4 and $12.98 for the full year.
"The target increase, while modest, signals confidence in Diamondback's low-cost structure and prime Permian position," said Michael Rivera, a portfolio manager at Horizon Capital Advisors. "They're a textbook 'steadier hand' in a volatile market, which is why they often appear on low-risk dividend stock lists."
However, not all observers are convinced. Sarah Chen, an energy analyst at the Green Frontier Fund, offered a sharper critique: "This is Wall Street rearranging deck chairs. A $3 target bump is noise. The real story is that oil producers are stuck in a maintenance rut while the world slowly pivots. Diamondback is efficient, but it's still betting against the long-term energy transition."
David Park, a private investor focused on energy income, added: "For dividend seekers, the stability is attractive. But Piper's own note highlights the divide: growth is in gas and LNG now. Oil players are in a holding pattern."
Piper Sandler's sector view projects that most oil companies will maintain conservative, maintenance-style capital programs into 2026, while several natural gas producers ramp up growth initiatives to meet expanding LNG demand.