On Thursday, Kinetik Holdings Inc. (NYSE:KNTK) saw its stock price target increased by Mizuho from $47.00 to $55.00, while the firm maintained its Outperform rating on the stock. The midstream energy company has been recognized for its strong year-to-date performance, which has surpassed many of its peers in the industry. Kinetik's stock has soared by 51.8% compared to the AMEI index's 27.5% rise.
The positive adjustment in Kinetik's price target follows the company's strategic acquisition of Durango Midstream, which has been well received by the market. The deal's value was further affirmed by a similar acquisition by Enterprise Products Partners (NYSE:EPD) L.P. of Pinon Midstream, suggesting a favorable market view of such transactions.
Kinetik's growth outlook appears robust, with the company expected to achieve significant adjusted EBITDA growth in the medium term. This optimism is based on several factors, including the recent Durango acquisition, potential growth projects within the Durango footprint, gas processing agreements in Eddy and Lea Counties, and anticipated benefits from natural gas liquids (NGL) pipeline recontracting.
The analyst at Mizuho believes that the recent market re-rating of Kinetik Holdings reflects confidence in the company's growth prospects and a less concerning liquidity situation. The improved financial estimates and the raised price target are indicative of the analyst's expectation of Kinetik's continued strong performance.
In other recent news, Kinetik Holdings has seen a series of positive revisions from major analyst firms. Barclays (LON:BARC) has increased its stock target for Kinetik Holdings to $47, citing strong demand for infrastructure investment within the company's operational regions.
This includes the Kings Landing 1 processing facility, scheduled to start operations in 2025, and potential investment in the integration and optimization of Kinetik's Northern and Southern Delaware systems.
Citi has also raised its price target for Kinetik, anticipating a dividend hike due to the firm's expansion into New Mexico and the recent Durango acquisition. This expansion is expected to generate significant commercial interest and lead to sustained double-digit EBITDA growth for several years.
RBC Capital Markets has adjusted its outlook on Kinetik, noting the company's ongoing projects and financial expectations. Kinetik's second-quarter earnings for 2024 showed a 13% year-over-year increase in adjusted EBITDA and a generation of $163 million in distributable cash flow and $105 million in free cash flow.
Despite a target cut from Goldman Sachs (NYSE:GS), the firm maintains a positive outlook on Kinetik. The firm adjusted Kinetik's EBITDA forecast for 2024 to be between $940 million and $980 million, factoring in the Durango acquisition and the divestiture of the remaining interest in the GCX project.
These recent developments underscore Kinetik's strategic positioning for growth and its commitment to advancing its infrastructure to meet rising demand.
InvestingPro Insights
Kinetik Holdings Inc.'s recent performance and positive outlook are further supported by data from InvestingPro. The company's stock is currently trading near its 52-week high, with a remarkable year-to-date price total return of 61.16% as of the latest data. This aligns with the article's mention of Kinetik's strong year-to-date performance surpassing many industry peers.
InvestingPro Tips highlight that Kinetik has raised its dividend for 3 consecutive years, which may appeal to income-focused investors. Moreover, the company's dividend yield stands at an attractive 6.15%, potentially contributing to its overall strong returns.
The company's financial health appears solid, with a P/E ratio of 9.73, suggesting it may be undervalued relative to its earnings. This could be particularly interesting in light of Mizuho's increased price target and the positive market reaction to Kinetik's strategic moves.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Kinetik Holdings Inc., providing a deeper understanding of the company's financial position and market performance.
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