Kodiak Gas Services stock price target lowered to $48 at Raymond James

Investing.com - Raymond (NSE:RYMD) James lowered its price target on Kodiak Gas Services Inc (NYSE:KGS) to $48.00 from $51.00 on Thursday, while maintaining an Outperform rating on the stock. The company, currently valued at $2.8 billion, has demonstrated strong financial health according to InvestingPro analysis, with a notable dividend yield of 5.63%.

The firm noted that Kodiak’s second-quarter 2025 results exceeded expectations modestly, prompting the company to slightly raise its guidance. The company generated revenue of $1.17 billion in the last twelve months, with an impressive EBITDA of $681.71 million. Despite weaker outlook for Other Services in the second half of 2025 and the divestiture of smaller horsepower units, Raymond James highlighted improvements in the core Contract Compression business, including better fleet utilization, average revenue per horsepower per month, and margins.

During the second quarter, Kodiak returned $50 million to shareholders and added $100 million to its share repurchase authorization, bringing the total available to $115 million. The company also made small upward adjustments to its full-year EBITDA and DCF guidance.

Raymond James cited robust visibility in the Permian Basin, where operators are increasing production in gas-rich wells with higher gas-to-oil ratios. The firm expects favorable growth as Kodiak continues to contract units at rates above the current fleet average while deploying new large horsepower assets.

The price target reduction to $48 from $51 reflects what Raymond James described as "a slightly lower multiple environment," though the firm maintained its Outperform rating on Kodiak Gas Services stock. For deeper insights into KGS’s valuation and growth prospects, including 8 additional key ProTips and comprehensive financial analysis, visit InvestingPro, where you’ll find detailed research reports and expert analysis.

In other recent news, Kodiak Gas Services reported strong financial results for the second quarter of 2025. The company achieved earnings per share of $0.43, surpassing analyst expectations of $0.40, marking a 7.5% increase over projections. Revenue also exceeded forecasts, reaching $322.84 million compared to the anticipated $230.46 million. These figures highlight Kodiak’s robust performance in the quarter. Despite the positive earnings and revenue results, market reactions were mixed, reflecting broader market trends and investor concerns about potential future challenges. This update comes amid other developments in the energy sector, where companies are navigating complex economic conditions. Investors are closely monitoring these trends for their potential impact on future earnings. Analyst firms have noted the importance of these earnings results for Kodiak’s strategic positioning.

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