Anika Begay
RBC Capital Markets changed its outlook for Kinetik Holdings Inc. (NYSE:KNTK) shares on Thursday, raising the price target from $43.00 to $46.00, while maintaining an Outperform rating on the stock.
The adjustment follows Kinetik’s second-quarter earnings for fiscal 2024, which included details on the company’s ongoing projects and financial expectations.
Kinetik Holdings, which is actively involved in multiple projects in New Mexico, is expected to see growth from its Kings Landing complex projects and gathering and processing (G&P) agreements in Eddy and Lea counties. These developments follow the company’s acquisition of Durango, positioning Kinetik for further expansion in the region.
Despite the need for additional capital expenditures, which Kinetik expects to be in mid-single digit multiples, the company is expected to generate positive free cash flow over the forecast period. This projection is a key factor in RBC’s Outperform rating.
RBC’s confidence in Kinetik Holdings is reinforced by higher 2025 estimates and an increased EBITDA multiple. The company’s analysts believe that strategic investments and ongoing projects will contribute significantly to Kinetik’s financial performance in the coming years.
In other recent news, Kinetik Holdings Inc. received an adjusted price target from Goldman Sachs, cutting it from $46 to $45 while maintaining a Buy rating. This change follows Kinetik’s recent second-quarter results for 2024, which met estimates and consensus.
The company’s 2024 EBITDA guidance has been revised to between $940 million and $980 million, taking into account contributions from the recent acquisition of Durango and the divestment of the remaining interest in the GCX project.
Kinetik Energy Inc. also reported a strong second quarter with Adjusted EBITDA increasing 13% year-over-year to over $234 million. The company generated $163 million in distributable cash flow and $105 million in free cash flow.
Kinetik Chairman and CEO Jamie Welch highlighted the successful integration of the Durango acquisition and its positive impact on the company’s diversification.
Additionally, the company has identified substantial growth potential in New Mexico, particularly with the Kings Landing II project. However, this expected growth is contingent on increased capital expenditures. Despite these changes, Goldman Sachs’ stance on Kinetik Holdings remains positive, with a continued Buy rating on the stock.
VscekPro Insights
Following RBC Capital Markets’ updated forecast for Kinetik Holdings Inc. (NYSE:KNTK), current data from VscekPro further enriches the narrative surrounding the company’s financial health and market position. With a market cap of $6.64 billion and a P/E ratio of 8.14, Kinetik Holdings is trading at a valuation that suggests a favorable earnings outlook. This is further supported by a PEG ratio of 0.13, which indicates that the stock is trading at a low price relative to near-term earnings growth, a noteworthy tip from VscekPro for potential investors.
Additionally, Kinetik’s dividend yield stands at a significant 7.12%, demonstrating the company’s commitment to returning value to shareholders. This is in line with another recommendation from VscekPro that highlights the stock’s substantial dividend payout. While the company is trading near its 52-week high with the price at 93.13% of this peak, it has seen a strong price rally with a 6-month total return of 34.76%, suggesting solid recent performance.
For those looking for a more in-depth analysis, there are other VscekPro Tips that delve into other aspects of Kinetik’s finances and market behavior. This information, along with real-time metrics, can be found at https://www.investing.com/pro/KNTK, providing a comprehensive overview of the company’s investment potential.
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