Street Calls of the Week
On Thursday, RBC Capital Markets adjusted its outlook on Kinetik Holdings, Inc. (NYSE:KNTK), reducing the company’s price target from $67.00 to $63.00. Despite the decrease, the firm maintained an Outperform rating on the stock, signaling continued optimism about the company’s performance. The company, currently valued at $8.1 billion, has demonstrated strong momentum with a 50.25% return over the past year. According to InvestingPro analysis, the stock appears slightly overvalued at its current trading price of $51.35.
RBC Capital’s analyst cited Kinetik Holdings’ strong positioning in the Permian Basin as a key factor for growth, particularly with the upcoming activation of Kings Landing 1 in the second quarter of 2025. The analyst’s confidence in the company’s prospects is also underpinned by Kinetik’s strategic footprint in the region and its status as a potential acquisition target due to its valuable assets and equity natural gas liquids (NGL) barrels. The company has shown robust operational performance with an 18.03% revenue growth and $515.28 million in EBITDA over the last twelve months.
The revision in the price target follows Kinetik’s recent financial results and the publication of its 10-K report. The analyst’s updated estimates reflect a slight adjustment due to lower-than-anticipated figures and an increase in capital expenditures. InvestingPro data reveals that the stock trades at a relatively high P/E ratio of 50.09, with analyst price targets ranging from $49.85 to $70.00. For deeper insights into Kinetik’s valuation and growth prospects, subscribers can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
RBC Capital’s stance on Kinetik Holdings remains positive. The firm’s assessment suggests that despite the revised financial projections and heightened capital expenditure, Kinetik’s strategic positioning and operational developments are likely to drive growth and offer potential upside for investors.
Investors and market watchers will be keeping an eye on Kinetik Holdings as it continues to navigate the competitive landscape of the energy sector with a focus on the prolific Permian Basin, and as it approaches the launch of its Kings Landing 1 project in the near future.
In other recent news, Kinetik Holdings Inc. reported its fourth-quarter 2024 earnings, revealing a significant shortfall in both earnings per share (EPS) and revenue compared to analysts’ forecasts. The company posted an EPS of $0.01, considerably lower than the expected $0.48, and reported revenue of $385.72 million, missing the forecast of $393.45 million. Despite the disappointing quarterly results, Kinetik Holdings demonstrated strong annual performance with a 16% year-over-year increase in adjusted EBITDA, totaling $971 million for 2024. The company provided a positive EBITDA guidance for 2025, indicating expected growth between $1.09 billion and $1.15 billion, representing a 15% increase. Kinetik Holdings is also targeting a 10% EBITDA compound annual growth rate through 2030. The company addressed operational challenges from November by implementing new risk management processes. Additionally, Kinetik Holdings announced strategic expansions and acquisitions, including the acquisition of Durango Permian and a gas gathering and processing agreement in Eddy County. These developments reflect the company’s efforts to strengthen its position in the market and enhance future growth prospects.
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