Truist raises Kodiak Gas Services stock target to $47, maintains Buy

Published 11/03/2025, 15:26
Truist raises Kodiak Gas Services stock target to $47, maintains Buy

On Tuesday, Truist Securities updated its outlook on Kodiak Gas Services Inc (NYSE: KGS), with analyst Neal Dingmann increasing the price target from $45.00 to $47.00 while reaffirming a Buy rating on the company’s shares. This adjustment comes in the wake of a notable decline in Kodiak’s stock value, which saw an approximate 18% drop since the company reported its earnings last week, and a roughly 33% fall from its late January peak. These figures contrast with the S&P 500’s respective 4% and 8% decreases during the same timeframes.

Dingmann attributes the recent underperformance of Kodiak shares to a widespread move away from energy market investments and some concerns over pricing within the sector. Despite these challenges, Truist Securities remains optimistic about Kodiak’s financial prospects. The firm’s analysis suggests that Kodiak’s price per horsepower (HP (NYSE:HPQ)) is expected to remain robust, potentially returning to the high levels experienced in the previous year, as demand continues to be stable and supply remains constrained. InvestingPro analysis shows strong fundamentals, with a healthy gross profit margin of 60.5% and revenue growth of 36.3% in the last twelve months.

The analyst’s confidence in Kodiak is also supported by the expectation of sustained shareholder returns and debt reduction, underpinned by the company’s stable earnings and free cash flow (FCF). While InvestingPro data indicates the company operates with a significant debt burden, it maintains a solid current ratio of 1.2. Dingmann’s commentary highlights the belief that the recent dip in Kodiak’s stock price does not reflect the company’s solid pricing and utilization narrative, which he anticipates will persist. For deeper insights into Kodiak’s financial health and detailed metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Kodiak Gas Services’ financial health seems to be on solid ground according to Truist Securities’ assessment. The firm projects that the company will maintain its strong performance in the current quarter, which could lead to improved pricing and utilization rates. This outlook is based on the current market dynamics, with stable demand and limited supply playing key roles in supporting Kodiak’s business model.

Investors have been watching Kodiak closely, especially after the recent downturn in its share price. With Truist Securities’ updated price target and maintained Buy rating, market participants now have a revised benchmark to consider when evaluating the company’s stock performance going forward. Truist Securities’ analysis provides a positive perspective on Kodiak’s potential for recovery and growth in the near term.

In other recent news, Kodiak Gas Services reported mixed results for the fourth quarter of 2024, with revenue reaching $309.5 million, surpassing analyst expectations of $253.79 million. However, the company fell short on earnings per share, reporting $0.21 against the expected $0.34. For the full year, Kodiak’s net income attributable to common shareholders rose to $49.9 million, a significant increase from $20.1 million in 2023, and adjusted EBITDA increased to $609.6 million from $438.1 million the previous year. The company has projected 2025 adjusted EBITDA between $685 million and $725 million, with growth capital expenditures anticipated to be between $240 million and $280 million. Stifel analysts maintained a Buy rating and a $45 price target on Kodiak Gas Services, highlighting the company’s robust financial performance and strategic investments. Similarly, RBC Capital reaffirmed an Outperform rating, though they adjusted their price target to $45 from $52, citing increased capital expenditures and slightly lower estimates for 2026. Kodiak’s strong position is further supported by its fully contracted new unit capital expenditures and planned investments for growth. The company continues to benefit from high fleet utilization, which reached 97% in the fourth quarter, and ongoing demand for compression services, particularly in the Permian Basin.

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

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