Diversified Energy PLC: Updated "Buy" Recommendation with Adjusted Target Price

First Berlin Equity Research GmbH has released a research update on Diversified Energy PLC, maintaining a "Buy" recommendation while adjusting its target price to GBp 2800 from a previous GBp 3600. This adjustment reflects a 44% discount to the peer group, with the revised target price based on 2024E EV/adjusted EBITDA valuations. Analyst Simon Scholes highlights DEC's strong growth trajectory, with a five-year CAGR in adjusted EBITDA of 10.5%, surpassing its peers' 8.3%.

Despite facing a dividend cut, the recovering commodity market and increased acquisition activities foretell sustained growth for DEC. The update suggests that DEC's valuation, when using a multiple of 7.7x, reflects a fair share price adjusted to account for the competitor's higher market caps. This financial analysis suggests DEC could potentially close the existing gap with its peers.