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On Thursday, Truist Securities adjusted its outlook on Kodiak Gas Services Inc (NYSE: KGS), raising the price target to $45.00, up from the previous $40.00, while maintaining a Buy rating on the stock. The adjustment follows the news that Kodiak's private equity owner, EQT (ST:EQTAB), sold 5.5 million shares, reducing its holdings to approximately 43% of the company's total shares outstanding.
The sale by EQT was anticipated by investors, as Kodiak Gas Services had previously indicated that its private equity owner was looking to monetize a significant portion of their stake in the company. Despite the sale, Truist Securities believes that the reduction in EQT's holdings does not reflect a diminished confidence in Kodiak's business performance.
Kodiak Gas Services has been reporting record operations, which the analyst believes warrants a re-rating of the company's trading multiple. This re-rating is likened to that of other leading operators in the midstream sector. The firm's optimistic view on the company's financial health and market position has led to the increased price target.
The recent transaction by EQT has resulted in their holdings now standing at 38.5 million shares. The sale represents a significant shift in the ownership structure of Kodiak Gas Services, yet it is perceived as a strategic move rather than a commentary on the company's future prospects.
In summary, Truist Securities' revised price target for Kodiak Gas Services reflects confidence in the company's continued strong operational performance and aligns with the industry's trend of rewarding leading midstream operators with higher trading multiples.
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