UPDATE: Sterne Agee Upgrades Diamondback Energy Ahead of Expected Impact from Mineral Rights Acquisition

In a report published Tuesday, Sterne Agee analyst Tim Rezvan upgraded the rating on Diamondback Energy FANG from Neutral to Buy, and named a $54.00 price target. In the report, Sterne Agee noted, “Upgrade to Buy, establish $54 PT after increasing earnings and SOTP NAV after September's mineral rights acquisition. We believe investors underappreciate the deal's magnitude, which adds ~1.5 mboe/d of production with no incremental expense. Shares trade in-line with the group on 2014 metrics. We think a premium valuation is warranted based on near-term growth expectations and resource quality. Drilling catalysts in the Permian Basin into year-end should help quantify the resource potential.” Diamondback Energy closed on Monday at $43.55.