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On Thursday, Mizuho (NYSE:MFG) Securities raised its price target on DT Midstream (NYSE:DTM) shares, moving the goalpost from $102.00 to $105.00 while maintaining a Neutral stock rating. The adjustment comes after DT Midstream’s fourth-quarter 2024 update, which revealed an increased five-year capital expenditure backlog of $2.3 billion. This expansion is seen as a significant step forward for the company, enhancing its "Pipeline" opportunity set. According to InvestingPro data, DT Midstream, currently valued at $10.06 billion, has demonstrated strong momentum with a 75% return over the past year.
Analysts at Mizuho noted that the upgraded capital expenditure backlog should alleviate some of the concerns regarding DT Midstream’s ability to grow. They believe that the nature of this growth is of high quality and justifies a re-evaluated valuation for the company. The positive developments were further supported by EXE’s fourth-quarter 2024 update, which clarified DT Midstream’s fiscal year 2025 outlook for the Haynesville region and signaled potential for productive capacity additions within fiscal year 2026. The company’s financial health is rated as GOOD by InvestingPro, with revenue growing at 6.4% and maintaining a healthy gross profit margin of 77.6%.
Mizuho estimates that DT Midstream’s remaining expansion projects in the Haynesville area, specifically the LEAP and Blue Union developments, could result in an approximate $300 million adjusted EBITDA increase. The firm also suggests that an accelerated ramp-up in U.S. Gulf Coast LNG export projects might necessitate additional activity in the Haynesville region sooner than anticipated, potentially boosting regional contracting.
Despite the optimistic view on DT Midstream’s fundamentals and the potential for increased earnings, Mizuho’s stance remains that the stock is currently fairly valued. This assessment follows a year-over-year strong performance by DT Midstream shares. The firm’s revised price target reflects the recent positive developments but also indicates a cautious approach to the stock’s current valuation. With a dividend yield of 3.32% and a P/E ratio of 27.2, InvestingPro analysis suggests the stock is currently trading above its Fair Value, with additional insights available in the comprehensive Pro Research Report.
In other recent news, DT Midstream reported its fourth-quarter and full-year 2024 earnings, highlighting a robust financial performance. The company saw a 5% increase in adjusted EBITDA to $969 million and announced a 12% increase in its quarterly dividend to $0.82 per share. Despite slightly missing the EPS forecast of $0.95 with an actual EPS of $0.94, the company remains optimistic about its future growth prospects. UBS analysts initiated coverage on DT Midstream with a Buy rating and a price target of $102, citing several growth catalysts, including the recent acquisition of a Midwest Pipeline, which increased the project backlog to $2.3 billion. This acquisition is expected to add approximately $350 million to the company’s cumulative EBITDA. Analysts from UBS also noted that DT Midstream’s solid operational infrastructure and strategic initiatives position it well for future growth. The company has outlined plans for two new utility-scale power generation projects and expects an 18% growth in adjusted EBITDA for 2025. Investors will be monitoring these developments as DT Midstream continues to execute its strategic initiatives.
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