ONEOK stock initiated with Hold rating at TD Cowen on limited growth outlook

Investing.com - TD Cowen has initiated coverage on ONEOK Inc (NYSE:OKE), a $51.7 billion market cap energy company, with a Hold rating and a price target of $91.00 on Monday. According to InvestingPro data, analyst targets for the stock range from $90 to $147, while the company’s current valuation indicates it may be slightly undervalued.

The research firm cited ONEOK’s significant acquisition strategy, noting the company has invested approximately $40 billion in acquisitions over the past two years to diversify beyond its traditional Rockies gathering and processing (G&P) and natural gas liquids (NGLs) operations.

These strategic acquisitions have expanded ONEOK’s portfolio into Refined Products and Permian NGLs, which TD Cowen acknowledges provide more stable earnings streams for the company.

Despite these positive developments, TD Cowen expressed concerns about ONEOK’s future growth prospects, specifically pointing to "limited industry need for NGL infrastructure growth beyond what has been announced."

The firm believes this market limitation could restrict ONEOK’s growth opportunities beyond currently sanctioned projects, contributing to its neutral stance on the stock.

In other recent news, ONEOK Inc. reported strong financial results for the first quarter of 2025, with net income reaching $636 million, or $1.04 per share. The company’s adjusted EBITDA was $1.78 billion, highlighting the success of its strategic expansions and operational achievements. In a significant development, ONEOK completed the acquisition of Delaware Basin JV for $940 million, gaining full ownership of natural gas gathering and processing facilities in the Delaware Basin. This acquisition enhances ONEOK’s energy infrastructure portfolio in the Permian Basin.

Additionally, ONEOK shareholders approved two new equity incentive plans at the Annual Meeting, reflecting the company’s ongoing commitment to aligning employee and shareholder interests. The 2025 Equity Incentive Plan and the 2025 Employee Stock Award Program authorize the issuance of millions of shares to eligible employees and directors. Furthermore, ONEOK reaffirmed its financial guidance for 2025, anticipating increased volumes in the upcoming quarters and projecting synergies and growth to reach $1.3 billion by 2027.

These developments indicate ONEOK’s focused strategy on organic growth projects and strategic joint ventures, positioning the company well in the competitive energy sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.