Kinder Morgan stock maintains buy rating at UBS on Outrigger acquisition

UBS reiterated its buy rating and $38.00 price target on Kinder Morgan (NYSE: KMI) Wednesday, citing the full quarter contribution from the company’s Outrigger acquisition. According to InvestingPro data, analyst targets for KMI range from $24 to $38, with the stock currently trading at $27.41. The company has demonstrated consistent shareholder returns, maintaining dividend payments for 15 consecutive years.

The investment firm slightly increased its second-quarter 2025 EBITDA estimate to $1,932 million from $1,929 million, positioning its forecast 0.6% above Kinder Morgan’s guidance of $1,920 million. UBS noted that the company’s guidance does not include contribution from the Outrigger acquisition. InvestingPro analysis shows the company’s last twelve months EBITDA reached $6.57 billion, with a solid gross profit margin of 50.26%. For deeper insights into KMI’s financial health and detailed valuation metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

The revised estimate reflects several factors including the Outrigger acquisition’s full-quarter contribution, outsized operating expenses in natural gas pipelines during the first quarter due to timing issues, and natural gas price tailwinds. These positive factors were partially offset by D3 RIN price headwinds. The company maintains relatively low price volatility with a beta of 0.75, making it an attractive option for income-focused investors, with its current dividend yield at 4.27%.

UBS adjusted its model to account for commodity price sensitivities, noting that Kinder Morgan’s 2025 crude guidance assumes $68 per barrel, while the quarter-to-date price of $62.16 per barrel implies a negative annual EBITDA impact of approximately $34 million. This translates to about an $8.5 million negative impact for the second quarter.

The firm also highlighted that the first quarter of 2025 did not show the full benefits of the Outrigger acquisition, as transaction costs offset 1.5 months of contribution, making the second quarter of 2025 "the first clean quarter" for evaluating the acquisition’s impact.

In other recent news, Kinder Morgan Inc (NYSE:KMI). reported its financial results for the first quarter of 2025, with revenue surpassing expectations at $4.24 billion, compared to the forecasted $4.08 billion. However, the company’s earnings per share (EPS) slightly missed projections, coming in at $0.34 against an expected $0.35. The company also announced a 2% year-over-year increase in dividends, reflecting a positive outlook despite the minor EPS shortfall. Additionally, Kinder Morgan expanded its project backlog by $900 million, focusing on meeting power demand.

In analyst updates, Stifel raised the price target for Kinder Morgan’s stock to $28, up from $27, while maintaining a Hold rating. This adjustment was based on updated estimates for 2025, particularly in natural gas pipelines and CO2 operations. Stifel’s valuation aligns with the new price target, indicating a neutral stance on the stock. These developments highlight Kinder Morgan’s strategic focus on expanding its infrastructure and maintaining a strong position in the energy sector.

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