KeyBanc: Significant Business Model Advantage Maintains "Neutral" Rating on Viper Energy (VNOM.US)

KeyBanc analyst Tim Rezvan published a research report, lowering the target price of Viper Energy Inc. (VNOM.US) from $56 to $54, while maintaining a "hold" rating. This adjustment reflects a revision in natural gas price forecasts, as well as updated production assessments following the completion of the Sitio Royalties Corp. acquisition. Despite the slight target price decrease, Wall Street remains bullish on the stock - all analysts covering the stock have issued "buy" or equivalent ratings. William Blair analyst Neal Dingmann initiated coverage on August 25 with a "buy" rating, further reinforcing this viewpoint. He emphasized Viper Energy's position as the world's largest publicly traded mineral company. Analysts believe that Viper Energy's extensive mineral rights provide a solid foundation for achieving sustainable earnings per share growth that surpasses industry average profit margins. This business model effectively lowers the risks of capital expenditures and inflation pressures while maintaining a high return for shareholders. In terms of short-term developments, the analyst pointed out that continued internal expansion, selective acquisition activities, and stock buybacks are core drivers that will support the company's profit growth. Additionally, plans to sell non-core assets are expected to release additional value. Given the attractive free cash flow yield of the stock and its industry-leading position in terms of land size and operational quality, analysts believe that Viper Energy should enjoy a valuation premium compared to its peers. Viper Energy is a subsidiary of Diamondback Energy (FANG.US), primarily owning, acquiring, and managing mineral and royalty interests related to oil and gas assets in the Permian Basin. The company generates revenue from royalties produced by its mineral properties, without directly bearing drilling or operational costs.