UPDATE: Piper Sandler Upgrades Viper Energy (VNOM) to Overweight
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(Updated - April 8, 2021 7:30 AM EDT)
Piper Sandler analyst Pearce Hammond upgraded Viper Energy (NASDAQ: VNOM) from Neutral to Overweight, PT $17.00.
The analyst comments "We are upgrading VNOM to OW from N as we believe the recent ~20% decline in the share price provides an attractive entry point. No change to our ratings for FLMN, MNRL and BSM. We continue to view minerals as an attractive vehicle for income-oriented investors given 10-13% FCF yields on '21-'22 estimates based on the current forward strip. While higher inflation and interest rates could create headwinds for yield vehicles, ultimately higher inflation is positive for oil pricing offsetting the headwind. There are cross currents buffeting oil (OPEC+ production return, negative demand revisions forthcoming due to nettlesome Covid shutdowns in the EU and key emerging markets, Iranian production returning to market via Chinese support and potentially a restart of the 2015 Iranian nuclear deal), however, we believe the pullback in mineral equities combined with double digit FCF yields and dividend yields of 6-13% for '21-'22 provide a favorable risk/reward."
Shares of Viper Energy closed at $14.51 yesterday.
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