On Tuesday, CFRA made a positive adjustment to Kinder Morgan 's stock (NYSE:KMI), upgrading its status from Hold to Buy and increasing its price target to $22.00 from the previous $19.00. The new price target is based on a 9.8x multiple of the projected enterprise value to 2025 EBITDA, which aligns with Kinder Morgan's historical forward average.
The firm has also revised its earnings per share (EPS) estimates, raising the 2024 forecast by $0.01 to $1.20 and the 2025 estimate by $0.07 to $1.35. The adjustment comes in the wake of a recent forecast by the U.S. Energy Information Administration, which predicts a potential decline in U.S. natural gas production in the second quarter due to cutbacks from gas producers. This anticipated decrease is expected to provide momentum for natural gas pricing.
CFRA believes that the demand for natural gas transportation will remain strong, highlighting Kinder Morgan's significant role in sourcing natural gas for liquefied natural gas (LNG) exports. The analysis suggests that even with a modest increase in gas prices, the U.S. will maintain its position as a low-cost region for natural gas.
The firm also points out that Kinder Morgan's shares currently yield 6.0%. Moreover, CFRA anticipates that Kinder Morgan will generate sufficient operating cash flows, which could likely lead to dividend increases by 2025.
InvestingPro Insights
Following CFRA's optimistic outlook on Kinder Morgan (NYSE:KMI), it's worth noting some key metrics and insights from InvestingPro that could further inform investors' perspectives. Kinder Morgan's market capitalization stands at a robust $43.12 billion, reflecting the company's significant presence in the energy sector. The stock's P/E ratio, a measure of its current share price relative to its per-share earnings, is 17.65, aligning with industry standards.
InvestingPro Tips highlight that Kinder Morgan has raised its dividend for 6 consecutive years and has maintained dividend payments for 14 consecutive years, which is consistent with CFRA's view of potential dividend increases. Moreover, the company has been trading near its 52-week high, indicating strong market confidence. Additionally, analysts predict that Kinder Morgan will remain profitable this year, with profitability also demonstrated over the last twelve months.
For investors looking for more in-depth analysis and additional insights, there are over 8 InvestingPro Tips available for Kinder Morgan at https://www.investing.com/pro/KMI. To get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, use the coupon code PRONEWS24.
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