Tuesday - Mizuho Securities has increased its price target for Kinetik Holdings Inc. (NASDAQ:KNTK) to $42.00, up from the previous target of $39.00. The firm continues to recommend a Buy rating for the stock. The adjustment comes as Kinetik Holdings has shown a strong performance relative to its Midstream peers, with a year-to-date increase of 16.8% compared to the AMEI index's 9.8% rise.
The firm attributes Kinetik's success to several key factors. First, there is a growing recognition of the company's operational leverage in the Permian region. Additionally, Kinetik's earnings outlook for 2024 is seen as being resilient and potentially benefiting from negative Waha gas prices. The company's operational and commercial strategies have also been well-received by the market.
Kinetik Holdings is perceived to have a more straightforward narrative in the coming year, with moderate capital expenditure needs, no direct reinvestment plan (DRIP) overhang, and more subdued expectations regarding a potential sale of its GCX asset. The firm notes that although Kinetik's balance sheet is improving, the pace of progress may decelerate with the reinstatement of full cash dividends, which is a situation that warrants close observation in the near term.
InvestingPro Insights
As Kinetik Holdings Inc. (NASDAQ:KNTK) garners a positive outlook from Mizuho Securities, recent data from InvestingPro aligns with the firm's sentiment. Kinetik's stock is currently trading at a low P/E ratio of 7.44, suggesting it may be undervalued relative to its near-term earnings growth. This is further supported by a PEG ratio of just 0.12 for the last twelve months as of Q4 2023, indicating potential for growth at a reasonable price. Additionally, the company has demonstrated a solid commitment to returning value to shareholders, with a significant dividend yield of 7.69% as of the latest dividend ex-date on February 21, 2024.
The company's financial health is underscored by a robust revenue growth of 18.06% in Q4 2023, coupled with a gross profit margin of 46.1% for the same period. Kinetik's performance is not just limited to its financials; the stock has shown strong returns, with a 22.17% price total return over the last three months. Investors should note that Kinetik is trading near its 52-week high, at 96.46% of the peak price, reflecting market confidence.
For those looking to delve deeper, InvestingPro offers additional insights and metrics that could further inform investment decisions. Discover more InvestingPro Tips for Kinetik Holdings by visiting https://www.investing.com/pro/KNTK, and take advantage of the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With 9 additional InvestingPro Tips available, investors have a wealth of information at their fingertips to explore Kinetik's investment potential.
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