On Wednesday, Scotiabank maintained a "Sector Perform" rating for Williams Companies (NYSE:WMB) stock but increased its shares target from $40.00 to $43.00.
The adjustment reflects expectations for seasonally lower yet in-line performance, considering typical summer trends and a decline in Haynesville production impacting gathering and processing (G&P) volumes.
Williams Companies has previously indicated that their February and May outlooks accounted for some G&P roll-offs. With the second half of 2024 underway, there is anticipation for discussions around the early effects of the fiscal year 2025 guidance, particularly in light of the challenging macroeconomic environment. The fiscal year 2025 EBITDA guidance stands at $7.4 billion.
The revised price target of $43 is based on an 11x multiple of the estimated 2025 EBITDA, which is also used for the 2026 EBITDA projection. This valuation represents the highest relative multiple in the midstream sector. According to Scotiabank, the increase is justified by the company's growth profile.
Williams Companies, a player in the energy infrastructure space, is expected to navigate through the fluctuations in domestic gas basin activity. As the market heads into the latter half of the year, investors and analysts alike will be closely watching the company's financial performance and strategic moves.
The updated price target suggests a modest upside from the previous valuation, signaling a cautious yet optimistic view of the company's financial prospects in the coming years.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.