Bank of America upgrades Diamondback Energy amid oil market turmoil

On April 29, 2025, amid a challenging climate affecting the oil markets, Bank of America identified Diamondback Energy as a top investment choice in the sector. Market analysts, led by Kalel Akamine, decided to upgrade the company's stock rating from neutral to buy. This decision was influenced by a combination of factors including a trade war and price war resulting from unexpected supply hikes orchestrated by OPEC+. The updated price target was lowered to $170 from $202, reflecting a projected share rise of approximately 23.3% from the stock's closing price on the previous day. As part of the rationale for this assessment, analyst Akamine noted the importance of combining defensive and value strategies rather than relying solely on defense. He emphasized that among the largest and most liquid companies within their coverage, Diamondback Energy stands out as possessing an attractive mix of defensive qualities and value. This recommendation came in light of Diamondback shares declining nearly 16% in 2025, which Akamine associated with investor perceptions and a potential share overhang affecting the stock's performance. The analysis also highlighted the current tumult in global oil prices, projecting that oil prices have not yet hit their lowest point. However, Akamine expressed optimism regarding a potential de-escalation of the pricing war among oil producers. He suggested that while Diamondback Energy maintains a leveraged balance sheet, the firm is well-positioned to generate free cash flow in the near term, which could further bolster its market standing. This report showcases how external economic pressures can shape investment landscapes, particularly within volatile industries like oil and gas. Bank of America's endorsement of Diamondback Energy reflects a strategic vision in navigating these unpredictable market conditions and identifying opportunities even when faced with significant challenges.