- KeyBanc capital markets Analyst Tim Rezvan further downgraded the rating Viper Energy Partners LP VNOM To sector weight of overweight.
- The analyst disagrees with VNOM’s fundamental value proposition of prioritizing buybacks over generating distributable cash flows and removed the $37 price target.
- Rezvan is bearish on the intensity of VNOM’s buybacks, as seen in Q3 and Q4 2022. Amid economic uncertainty and weak oil prices, VNOM’s unit is down 11% year-to-date, and the analyst is skeptical about the profitability of cash return lines.
- With shorter commodity price cycles, uncertain shale resource lifespans and ESG headwinds, Rezvan doesn’t expect public markets to price public mineral valuations higher.
- Rezvan raised his expectations for 2023 EBITDA to $555.1 million (up from $536.7 million vs $641.8 million cons EBITDA) and EPS to 1 from $1.10, $34.
- He now projects 2024 EBITDA of $603.0 million ($616.9 million earlier, vs. Cons. EBITDA of $687.7 million) and earnings per share of $1.36 -dollars versus $1.34 previously.
- price action: VNOM shares trade 2.92% lower at $27.26 on last check Wednesday.
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