UPDATE: Sterne Agee Initiates Diamondback Energy at Buy on Valuation

Sterne Agee initiated coverage on Diamondback Energy

with a Buy rating and a $22 price target. Sterne Agee commented, "We believe Diamondback is an attractive pure-play bet on the expanding oil potential within the Permian Basin. The company's takeaway contracts ensure availability of infrastructure, mitigating the largest headwind facing the play. Low-risk Wolfberry drilling provides clarity on near-term cash flow, which we expect to be augmented by hedges. Upside is primarily driven by the horizontal drilling potential across its acreage." Diamondback Energy closed at $16.71 on Monday.