Peel Hunt has described the recent weakness in Diversified Energy Company PLC (LSE:DEC, NYSE:DEC) shares as a “compelling buying opportunity”, arguing that the stock’s fall is unwarranted.
The drop followed a Reuters report suggesting potential US tax penalties for UK-headquartered energy companies.
However, Peel Hunt stressed that Diversified is based in the US and pays US taxes, meaning it is unlikely to be affected by the proposed Section 899 legislation, which appears to target European and UK firms such as Shell and TotalEnergies.
Operationally, Peel Hunt believes Diversified has never been stronger.
The broker pointed to the recently closed MNR acquisition, which bolsters the group’s footprint across key US basins and is expected to deliver a 25% uplift in adjusted per-unit EBITDA margins and $50 million in synergies.
Peel Hunt reiterated its 'buy' rating and 3,000p price target, underlining confidence in the company’s fundamentals and value proposition.
The shares were up 1.4% at 1,045p.