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Wednesday, UBS analysts began coverage on DT Midstream (NYSE:DTM) shares, assigning a Buy rating and setting a price target of $102.00. The firm sees several near-term catalysts for the company, which operates natural gas pipelines, storage, and gathering systems. The analysts highlighted upcoming behind-the-meter power deals, the potential for a rating agency upgrade, and the underappreciated volume growth in the Haynesville region as key drivers for the company’s growth.
DT Midstream’s recent acquisition of a Midwest Pipeline has significantly increased its project backlog, which now stands at $2.3 billion for the period from 2025 to 2029, a $1 billion increase from previous estimates. UBS analysts estimate that with a build multiple of 6.5 times, this could add approximately $350 million to the company’s cumulative EBITDA, building upon its current EBITDA of $698 million. The company maintains a healthy dividend yield of 3.65% and has raised its dividend for four consecutive years, as noted in InvestingPro’s analysis, which includes 6 additional key insights about the company’s financial health.
The analysts further noted that these developments would enable DT Midstream to grow its EBITDA by 5-7% over the next three years, all while staying within its cash flow. This growth forecast is based on the company’s ability to capitalize on its increased backlog and the strategic deals it has in the pipeline.
The UBS team’s optimism about DT Midstream shares is also supported by the company’s solid operational infrastructure. DT Midstream’s assets include both interstate and intrastate pipelines, which are essential components of the natural gas distribution network.
Investors and market watchers will likely keep a close eye on DT Midstream as it progresses with its strategic initiatives and seeks to deliver on the growth and financial targets outlined by UBS analysts in their coverage initiation.
In other recent news, DTE Midstream Inc. reported its fourth-quarter and full-year 2024 earnings, highlighting a 5% increase in adjusted EBITDA to $969 million. The company also announced a 12% increase in its quarterly dividend, raising it to $0.82 per share. Despite a slight miss on earnings per share (EPS), coming in at $0.94 compared to the forecasted $0.95, the company’s financial results were well-received, with an optimistic outlook for 2025. DTE Midstream anticipates an 18% growth in adjusted EBITDA for 2025, projecting a range of $1,095 million to $1,155 million. The company also unveiled two new utility-scale power generation projects, further expanding its infrastructure portfolio. Additionally, DTE Midstream received an upgrade to investment grade by Fitch, with positive outlooks from both S&P and Moody’s. These developments reflect DTE Midstream’s strategic focus on growth and its commitment to maintaining a strong financial position.
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