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BofA Securities maintained its Buy rating and $118.00 price target on DT Midstream (NYSE: DTM), representing about 12% upside from the current price of $105.05, following a call with the company’s CEO David Slater about gas pipeline developments. According to InvestingPro data, the stock has delivered an impressive 56.72% return over the past year, though current analysis suggests the stock may be slightly overvalued.
The firm’s analysis focused on recent gas pipeline announcement activity in the Northeast, where five major projects have been announced across multiple companies. According to BofA Securities, Slater attributed this activity to intervention from former President Trump and utilities becoming more comfortable signing up for additional gas capacity due to severe need and reduced criticism of fossil fuels. DT Midstream has shown strong operational performance, with revenue growing 10.83% in the last twelve months and maintaining a healthy 76.63% gross profit margin.
DT Midstream’s Millennium PRO open season for 500 million cubic feet per day from Appalachia to New England was successful, with the next steps involving finalizing the project path and securing binding contracts. The company may be able to operate within Millennium’s maximum rate of 58 cents per thousand cubic feet, which BofA Securities estimates would generate approximately $50 million in EBITDA for DT Midstream. This would add to the company’s current EBITDA of $735 million, while providing shareholders with a steady 3.15% dividend yield. For detailed financial analysis and additional insights, check out the comprehensive research report available on InvestingPro.
The company had previously attempted an open season in 2022 but failed to reach critical mass for the project. Slater noted that utilities are now more actively participating in these initiatives.
BofA Securities reported that Slater indicated all incremental new construction will be on existing utility corridors, with the company preferring 15-20 year negotiated fixed rates for its projects.
In other recent news, DT Midstream Inc. reported its Q1 2025 earnings, showcasing a revenue of $288.81 million, which surpassed the forecast of $285.91 million. However, the earnings per share (EPS) were slightly below expectations at $1.06 compared to the anticipated $1.08. The company reaffirmed its 2025 and 2026 adjusted EBITDA guidance, reflecting confidence in its strategic initiatives. Moody’s Ratings upgraded DT Midstream’s senior unsecured notes rating to Baa3 from Ba2, recognizing the company’s improved earnings stability and scale. Concurrently, Moody’s downgraded the company’s senior secured revolving credit facility and senior secured notes to Baa3, aligning with the unsecured notes based on the expectation that the entire capital structure will become senior unsecured. UBS analyst Manav Gupta maintained a Buy rating on DT Midstream, with a steady price target of $115, highlighting the company’s strategic positioning to capitalize on emerging opportunities in the natural gas infrastructure sector. The company’s management expressed confidence in its asset base and its strategic focus on leveraging core competencies without overextending into unfamiliar ventures.
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