Morgan Stanley Raises Diamondback Energy Price Target to $186, Keeps Overweight Rating

Morgan Stanley raised Diamondback Energy's price target to $186 from $184 and maintained an Overweight rating on the shares. The firm noted that Q2 results highlighted cash flow tailwinds from efficiency gains and reduced taxes, but the sector has already reflected this uplift. The analyst's 2026 free cash flow estimates for the group are rising by an average of 7% at flat commodity prices.

Morgan Stanley has raised its price target for Diamondback Energy (FANG) to $186 from $184, maintaining an "Overweight" rating on the shares. The firm noted that the company's Q2 results highlighted cash flow tailwinds from efficiency gains and reduced taxes, but the sector has already reflected this uplift. The analyst's 2026 free cash flow estimates for the group are rising by an average of 7% at flat commodity prices [1].

Diamondback Energy reported adjusted EPS of $2.67 for Q2, beating Wall Street expectations of $2.63, and revenue of $3.7 billion, topping forecasts of $3.3 billion. The company's revenue increased by 48.1% year-over-year. Despite the positive earnings report, the stock has underperformed the broader market, declining 28.7% over the past year compared to the S&P 500's 16.4% rise [2].

Institutional investors have been active in Diamondback Energy's stock. Philadelphia Trust Co. decreased its holdings by 14.0%, selling 6,912 shares, while other institutional investors have increased their stakes. The company announced a $4.00 annual dividend, representing a 2.8% yield [3].

Morgan Stanley's upgrade reflects the company's operational resilience and dominance in the Permian Basin, where 89.8% of its production comes from. The analyst's positive outlook is based on the company's ability to navigate volatility and maintain strong cash flows. However, the stock's performance relative to the broader market and sector ETFs remains a concern for investors [2].

References:
[1] https://www.ainvest.com/news/diamondback-energy-0-19b-volume-ranks-494th-stock-falls-0-5-morgan-stanley-target-hike-2508/
[2] https://www.newsbreak.com/barchart-338247362/4181509452480-what-are-wall-street-analysts-target-price-for-diamondback-energy-stock
[3] https://www.marketbeat.com/instant-alerts/filing-philadelphia-trust-co-sells-6912-shares-of-diamondback-energy-inc-nasdaqfang-2025-08-16/