Diversified Energy Company PLC (LSE:DEC, NYSE:DEC) has a number of tailwinds behind it, that’s according to analysts at Stifel, who see substantial upside to the current price.
Stifel, in a note, highlighted that guidance provided in Monday’s results statement was significantly ahead of both the broker’s expectations and consensus.
The broker has a valuation (NAV) pitched at 2,027p per share, versus a current market price of 1,003p in London.
Moreover, Stifel said this premium valuation includes “only small amounts” for the upcoming synergies achieved by DEC’s Maverick acquisition.
A re-rating can be expected, the broker added.
“There are a number of tailwinds for the business right now - gas prices are particularly strong, material synergies are expected from the Maverick deal, CMM revenues are increasing and the improved backdrop should be more supportive for land sales. All of these could put upward pressure on our NAV,” the analysts said.
On Monday, DEC chief executive Rusty Hutson told investors the firm has started the new year “in a position of strength as a bigger, better business”.
Over the year, production averaged 132,000 barrels of oil equivalent per day, and, by the end of December, the exit rate for the year measured 144,000 boepd.
Total revenue reached $946 million, inclusive of $151 million in commodity cash hedge receipts, whilst operating cash flow amounted to $346 million. The company posted a net loss of $87 million, after $141 million in tax-effected, non-cash fair value adjustments.
It retired over $200 million in debt principal, and returned $105 million to shareholders, including $21 million spent on share buybacks.
For 2025, Diversified Energy targets earnings (adjusted EBITDA) of between $825 million and $875 million and adjusted free cash flow of approximately $420 million.