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On Tuesday, Citi analysts maintained their Buy rating for Kinetik Holdings, Inc. (NYSE: KNTK), keeping the price target steady at $55.00. The $2.66 billion market cap company, which offers a notable 7.2% dividend yield, faces potential short-term market challenges related to the Durango acquisition. According to InvestingPro data, analyst price targets range from $42 to $70.
The analysts highlighted that two events connected to the acquisition could temporarily impact the stock. These include the expiration of a lock-up period on June 24 and deferred compensation due on July 1. Together, these events could introduce up to approximately 11.5 million shares to the market, accounting for about 7% of the company’s total shares outstanding. The stock currently trades at elevated multiples, with a P/E ratio of 47.6 and an EV/EBITDA of 18.6.
Citi analysts estimated that if these shares were sold, it could take over nine days for the market to absorb them, based on the average trading volume over the last 30 days. This potential influx of shares may lead to Kinetik Holdings’ stock being range-bound in the coming month.
Despite these short-term concerns, the analysts continue to see significant long-term upside potential for Kinetik Holdings. They believe the company’s strategic initiatives and market position remain strong.
The reaffirmation of the Buy rating suggests confidence in Kinetik Holdings’ future performance, even as the market navigates the anticipated increase in share availability.
In other recent news, Kinetik Holdings Inc. reported first-quarter 2025 earnings that did not meet analyst expectations, with earnings per share (EPS) at $0.05, significantly lower than the forecasted $0.36. Revenue also fell short, reaching $443.26 million compared to the projected $477.05 million. Despite these misses, Kinetik Holdings demonstrated a 7% year-over-year growth in adjusted EBITDA, totaling $250 million for the quarter. In a major financial move, Kinetik Holdings secured a $1.6 billion revolving credit facility and an additional $1.15 billion term loan, replacing previous credit agreements. These developments provide the company with substantial financial flexibility for future operations and growth initiatives.
Analysts have recently adjusted their outlooks on Kinetik Holdings. RBC Capital Markets revised its price target downward to $55 from $57, citing commodity headwinds, but maintained an Outperform rating. Citi upgraded Kinetik’s stock from Neutral to Buy, also setting a price target of $55, down from $58, citing a more attractive risk-return proposition. Meanwhile, Goldman Sachs lowered its price target to $54 from $61 but maintained a Buy rating, acknowledging that Kinetik’s first-quarter earnings slightly exceeded their estimates. Despite the earnings miss, Kinetik Holdings remains optimistic about its strategic initiatives and future growth, with strong forward guidance predicting an annualized EBITDA of approximately $1.2 billion by the end of 2025.
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