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On Wednesday, Raymond (NSE:RYMD) James analyst Justin Jenkins reaffirmed an Outperform rating and a $62.00 price target for Williams Companies (NYSE:WMB), which currently commands a market capitalization of $69.32 billion. According to InvestingPro data, the stock has delivered an impressive 54.28% return over the past year, though it currently trades above its calculated Fair Value. Jenkins highlighted the company’s recent announcement of a roughly $1.6 billion investment aimed at providing natural gas and power infrastructure for an undisclosed client. This investment is supported by a 10-year power purchase agreement that operates on a build multiple close to five times EBITDA for Williams Companies, with the agreement structured as essentially take-or-pay with some cost variability. The capital expenditure for this project is divided as $925 million in 2025 and approximately $700 million in 2026.
The project in question is believed to be Williams Companies’ Socrates Power Solution Facilities, which has not been widely recognized by investors, analysts, or the media. Jenkins noted that there has been previous discussion of potential Ohio load growth projects that contradicted the consensus view. Williams Companies’ subsidiary, Will-Power, plans to construct two power generation facilities in New Albany, Ohio, named Socrates North and Socrates South. These facilities are expected to generate a combined total of 400 MW of electricity, using natural gas as a fuel source.
The analyst also mentioned that Williams Companies has a proven track record in project execution. This was evident during the company’s fourth-quarter 2024 earnings call, where it was revealed that long-lead materials for this project had already been secured. InvestingPro analysis reveals the company’s strong financial foundation, with $5.59 billion in EBITDA and a remarkable 52-year streak of consecutive dividend payments, demonstrating consistent operational excellence. InvestingPro subscribers have access to 12 additional key insights about Williams Companies’ financial health and market position. Jenkins believes that there is a possibility of completing the project under budget, with the primary risk being timing. The Ohio Power Siting Board (OPSB) is set to oversee the projects, with applications anticipated to be filed in the second quarter of 2025, construction starting in the third quarter of 2025, and an online date targeted for the third quarter of 2026.
Furthermore, Jenkins pointed out that the projects are designed with minimal environmental impact and consideration for traditional utility customers. Public meetings regarding the projects are scheduled for March 25 and April 1, 2025. The location of these projects is in an area near Columbus (WA:CLC), Ohio, which has experienced significant industrial activity from companies like AWS, Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), and others in data center and traditional industrial sectors.
The lack of detailed information released by Williams Companies so far suggests the involvement of a significant customer, according to Jenkins. He also noted that the region has been facing grid constraints due to recent co-location projects. The analyst expects this topic to remain a key point of discussion among investors. With a consensus recommendation of 2.26 and analyst targets ranging from $41.76 to $74.00, market sentiment remains closely divided. Raymond James will be hosting Williams Companies for a non-deal roadshow within the week and plans to reach out to local contacts for further insights. For deeper insights into Williams Companies’ valuation and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which provides detailed analysis of the company’s financial health, market position, and growth potential.
In other recent news, Williams Companies has announced the successful issuance of $1.5 billion in senior notes as part of its strategy to manage its capital structure. This issuance includes $1 billion in 5.600% Senior Notes due in 2035 and $500 million in 6.000% Senior Notes due in 2055. The company completed this offering under its existing shelf registration statement. Additionally, Williams Companies’ fourth-quarter results for 2024 met analyst expectations, with an increased EBITDA guidance for 2025. Stifel analysts raised their price target for the company to $62, maintaining a Buy rating, while Mizuho (NYSE:MFG) Securities increased their target to $63, retaining an Outperform rating. Both firms highlighted the company’s strategic positioning in the AI and data center sectors. Furthermore, RBC Capital Markets has included Williams Companies in its "Best Ideas" list with an increased price target of $62, recommending an Outperform rating. These developments reflect the company’s ongoing growth prospects and financial strategies.
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