KeyBanc analyst Tim Rezvan has revised the firm's price target for Viper Energy (VNOM, Financial), reducing it from $62 to $56, while maintaining an Overweight rating on the stock. This adjustment comes as part of the firm's preparation for the upcoming earnings season and involves recalibrating estimates for the first quarter.
The firm has made notable changes to its commodity price forecasts, lowering expectations for oil prices while raising those for natural gas. KeyBanc suggests that current oil prices are overly stressed, reflecting pessimistic scenarios regarding production growth from OPEC+ and the U.S., as well as concerns over a global economic slowdown. Despite these pressures, the firm's oil price forecast remains higher than the current NYMEX WTI futures strip.
Regarding natural gas, the market has been influenced by unexpected weather conditions and the initiation of new LNG export projects, both of which have contributed to market recovery. Although KeyBanc expresses some concern over continuous production in the Lower 48 states, it anticipates that a slowdown in oil production may also lead to a decrease in associated natural gas output.
