On Monday, Truist Securities adjusted its outlook on shares of Kimbell Royalty Partners LP (NYSE: NYSE:KRP), raising the price target on the company's stock to $22 from the previous $21. The firm maintained a Buy rating on the shares. The adjustment follows a revision of the firm's financial model, which now includes updated forecasts for the years 2024 through 2026.
The revised price target is based on an 8.0% target yield applied to the estimated 2025 distributable cash flow. Truist Securities projects Kimbell Royalty Partners will have a distributable cash flow of $168 million in 2025, which is slightly below the consensus estimate of $175 million.
The new price target reflects the firm's confidence in Kimbell Royalty's ability to generate cash flow and provide returns to shareholders. The distributable cash flow is a key metric for investors in master limited partnerships like Kimbell Royalty, as it indicates the amount of cash available for distribution to unitholders.
The firm's updated model and forecasts are instrumental in providing guidance to investors regarding the expected financial performance of Kimbell Royalty Partners over the next few years. This new target suggests that Truist Securities believes Kimbell Royalty Partners is poised for solid financial growth.
Investors and market watchers will likely monitor Kimbell Royalty's performance closely to see if the company meets or exceeds the revised forecasts and to gauge the impact of these expectations on the stock's market performance.
In other recent news, Kimbell Royalty Partners reported record-setting first-quarter results in 2024, with new highs in daily production, revenue, and EBITDA. The company announced a 14% increase in distribution to $0.49 per common unit and remains optimistic about the future of the U.S. oil and natural gas industry.
Despite slow merger and acquisition activity, Kimbell Royalty Partners anticipates larger deals in the Permian basin and maintains a strong financial position with a conservative balance sheet.
In other developments, the company announced the passing of board member Ben J. Fortson. Mr. Fortson's contributions were integral to the company's development and continued success, with his strategic investments in oil and natural gas minerals and royalties playing a crucial role in the company's growth.
These are part of the recent developments at Kimbell Royalty Partners. The company's hedging program covers about 20% of their oil and natural gas production for the next two years, while production in the Haynesville shale grew by 3%, and the Permian shale saw a 5% increase.
Management expects to generate long-term value for unitholders and remains open to merger and acquisition opportunities in various basins, with a current focus on the Permian basin.
InvestingPro Insights
Following the positive outlook from Truist Securities on Kimbell Royalty Partners LP (NYSE: KRP), InvestingPro data provides additional insights into the company's financial health and market performance.
With a robust gross profit margin of 92.55% over the last twelve months as of Q1 2024, Kimbell Royalty demonstrates a strong capacity to generate earnings relative to its revenue. The company's management has also shown confidence in its financial strategy by aggressively buying back shares, which can be a signal of undervaluation and a commitment to increasing shareholder value.
Moreover, Kimbell Royalty Partners boasts a significant dividend yield of 11.68%, reflecting its commitment to returning value to shareholders. This is supported by a track record of maintaining dividend payments for 8 consecutive years. Additionally, the company's stock has been trading near its 52-week high, with a price 98.6% of the peak, indicating investor confidence and a potentially bullish outlook.
For investors seeking a deeper dive into Kimbell Royalty Partners' performance metrics and strategic insights, InvestingPro offers an array of additional tips. There are 13 more InvestingPro Tips available, including perspectives on cash burn, earnings multiples, and debt levels, which can be valuable for making informed investment decisions. To access these insights and benefit from an exclusive offer, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.