Gold prices steady ahead of Fed decision, Trump’s tariff deadline
On Thursday, Citi upgraded shares of DT Midstream (NYSE:DTM) from Neutral to Buy, setting a new price target of $115, up from the previous $90. The upgrade follows DT Midstream's announcement of a $1.2 billion acquisition of three FERC-regulated pipelines, which is expected to significantly enhance the company's profile.
According to Citi, this strategic move positions DT Midstream for growth, increasing the Pipeline segment to 70% of the business. This change not only distinguishes DT Midstream from its natural gas peers but also increases its market capitalization to over $10 billion. This growth in market cap is anticipated to draw a broader range of investors, including those from international markets.
The financial implications of the acquisition are also positive, with an approximate 4% accretion to distributable cash flow per share (DCF/sh) and around an 8% accretion to earnings before interest, taxes, depreciation, and amortization per share (EBITDA/sh). Citi's analysis suggests that the acquisition will bolster DT Midstream's position in the market, supporting its top-quartile dividend growth rate.
Furthermore, Citi sees the recent acquisition as a potential model for future deals that could continue to expand DT Midstream's size and close the valuation gap with its peers. Despite the company's growth, DT Midstream still trades at a roughly 0.5x discount to peers based on the 2026 EBITDA multiple of 11.5x. Citi views this as an attractive value opportunity for investors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.