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On Wednesday, Citi analyst team at Citi has updated their financial outlook on Enterprise Products Partners (NYSE:EPD), increasing the price target to $37 from the previous $36, while reiterating a Buy rating on the shares. The revision follows the company’s strong performance in the fourth quarter of 2024, which outpaced expectations. Currently trading near its 52-week high of $34.63, EPD has delivered an impressive 34% total return over the past year. According to InvestingPro data, the company maintains a "GOOD" overall financial health score, supported by strong profit and price momentum metrics.
The analysts highlighted that the adjustment in the price target is supported by two main factors. Firstly, the upward revision of Enterprise Products’ EBITDA estimate for 2025 to approximately $10.4 billion, a 1% increase from earlier projections. This estimate is slightly higher than the average street forecast and is seen as a realistic goal. The company’s fourth-quarter performance, which showed a run-rate of around $10 billion after adjustments for marketing efforts, and the scheduled commencement of roughly $6 billion in growth projects in the second half of the year, are expected to fuel a year-over-year growth of about 5%. This projection aligns with the management’s guidance for mid-single-digit growth. InvestingPro analysis shows the company’s current EBITDA at $9.39 billion, with revenue growing at 13.1% over the last twelve months.
Additionally, the analysts anticipate that by 2026, Enterprise Products will be generating over $1 billion in excess cash flow, which could be utilized for stock buybacks. This expectation is further bolstered by the reduced likelihood of a final investment decision (FID) on the SPOT project in the near term. As a result, the analysts foresee an acceleration in unit repurchases by Enterprise Products in 2026, coinciding with a significant reduction in growth capital expenditures.
The update from Citi comes after Enterprise Products reported a strong fourth-quarter performance that exceeded market expectations. The company’s strategic growth projects and management’s forward-looking statements have contributed to the positive outlook from analysts, reflecting confidence in the firm’s financial trajectory and potential for shareholder returns.
In other recent news, Enterprise Products Partners reported a Q4 earnings beat, with net income reaching $1.63 billion, surpassing analyst estimates of $0.71 per unit. However, the company’s revenue of $14.2 billion came in slightly below the consensus estimate of $14.24 billion. The company experienced record volumes in several of its business segments, including natural gas processing inlet volumes and NGL pipeline volumes. Total (EPA:TTEF) gross operating margin rose to $2.63 billion, with distributable cash flow increasing to $2.16 billion. For the full year 2024, the company reported a net income of $5.97 billion. Enterprise Products Partners also disclosed that it has approximately $7.6 billion of major growth capital projects under construction set to come online within the next three years. These recent developments highlight the company’s financial performance and future growth prospects.
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