On Friday, Roth/MKM increased its price target for Viper Energy (NASDAQ:VNOM) to $41.00, up from the previous $39.00, while reiterating a Buy rating for the stock. The firm highlighted Viper Energy as a leading pure-play Permian minerals company, noting its superior organic growth rate compared to peers, robust dividend, and clear multiyear operational visibility.
The firm's expectations for Viper Energy's first-quarter performance in 2024 are positive, with oil production slightly surpassing consensus estimates. The projected oil production is 25,473 barrels of oil per day (Bopd), which is about 0.4% higher than the median consensus of 25,370 Bopd and at the upper end of Viper Energy's guidance range of 25,000-25,500 Bopd.
Total production for the first quarter is also anticipated to exceed expectations, with an estimate of 45,628 barrels of oil equivalent per day (Boepd), surpassing the median consensus by 0.6% and the high end of Viper Energy's guidance by 0.3%. The company's previous guidance ranged from 44,750 to 45,500 Boepd.
The analyst pointed out that Diamondback (NASDAQ:FANG) Energy-operated volumes, which account for just over half of Viper Energy's production, had a solid quarter. This performance contributes to the optimistic outlook for Viper Energy's overall production figures.
Furthermore, the firm anticipates strong oil price realizations for Viper Energy in the first quarter of 2024. The expected prices are approximately 99% of the West Texas Intermediate (WTI) benchmark, as pre-reported by Diamondback Energy. Viper Energy's realizations are typically around $1 per barrel better than those of Diamondback Energy, suggesting favorable revenue outcomes for the period.
InvestingPro Insights
Analysts are showing confidence in Viper Energy's (NASDAQ:VNOM) upcoming period, with five of them revising their earnings estimates upwards. This optimism aligns with Roth/MKM's recent price target increase and could signal a strong financial outlook for the company. Adding to this positive sentiment, Viper Energy is currently trading at a low Price-to-Earnings (P/E) ratio of 14.43, which is noteworthy considering the near-term earnings growth, making it an attractive investment for value-oriented investors.
The company's stock is also known for its low price volatility, providing a level of stability in an investor's portfolio. Moreover, Viper Energy operates with a moderate level of debt and has liquid assets that exceed its short-term obligations, reflecting a solid balance sheet position that could support sustained growth and dividend payouts.
From a valuation standpoint, Viper Energy’s Price/Book ratio stands at 6.79 as of the last twelve months ending Q4 2023, which might be considered high; however, the company's strong return over the past three months, with a price total return of 28.58%, suggests that the market is recognizing the company's potential. Additionally, there are 11 more InvestingPro Tips available for VNOM, which could provide investors with deeper insights into the company's performance and potential investment opportunities.
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