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On Friday, UBS analysts maintained a Neutral rating on shares of Western Gas Partners (NYSE:WES), with a steady price target of $40.00. The firm’s analysts adjusted their first-quarter 2025 EBITDA estimate for the company to $604 million, down from the previously projected $614 million. The revision was attributed to an increase in operations and maintenance (O&M) expenses, which were impacted by higher utility costs. This was somewhat balanced by a reduction in general and administrative (G&A) expenses, as one-time items from the fourth quarter of 2024 did not recur.
The analysts’ revised EBITDA estimate aligns closely with the consensus estimate of $605 million for the same quarter. Additionally, UBS forecasted capital expenditures for Western Gas in the first quarter to be $175 million, a decrease from $239 million in the fourth quarter of 2024. The analysts also projected that the company would generate free cash flow (FCF) of $335 million during the first quarter of 2025. The company’s trailing twelve-month EBITDA stands at $2.24 billion, with a healthy EV/EBITDA ratio of 9.19x.
The report from UBS indicates an expectation that Western Gas Partners will be able to cover its distributions to shareholders through the free cash flow it generates. This financial maneuvering suggests a stable outlook for the company’s ability to maintain its shareholder commitments without the need to raise additional funds. InvestingPro data reveals that WES has maintained dividend payments for 13 consecutive years, currently offering an attractive 8.71% yield, with three straight years of dividend increases.
Western Gas Partners, which operates as a subsidiary of Anadarko Petroleum (NYSE:APC), specializes in the transportation, storage, and processing of natural gas and natural gas liquids. The company’s financial performance is closely watched by investors, as it provides key insights into the health of the energy infrastructure sector and broader market trends. With a market capitalization of $14.17 billion and impressive revenue growth of 16.06% in the last twelve months, WES demonstrates strong operational execution. Discover more detailed analysis and 12 additional ProTips by accessing the comprehensive research report available on InvestingPro.
In other recent news, Western Midstream Partners reported its fourth-quarter 2024 results, which fell short of analyst expectations. The company posted adjusted earnings per unit of $0.85, missing the consensus forecast of $0.87, and revenue of $858.9 million, below the anticipated $926.84 million. Despite this, Western Midstream achieved record annual natural gas throughput and significant growth in crude oil and NGLs throughput for the year. For 2024, the company generated adjusted EBITDA of $2.34 billion, aligning with its guidance, and exceeded its free cash flow guidance with $1.32 billion.
Western Midstream maintained its quarterly distribution of $0.875 per unit and aims for mid-to-low single-digit annual distribution growth in 2025. Separately, Stifel analysts have raised their price target for Western Gas to $41, while maintaining a Hold rating, following the company’s fourth-quarter results. The company also announced new water midstream projects, requiring a capital investment of $400 million to $450 million over the next two years, which could open additional revenue streams. Management expects capital expenditures to increase in the coming years, but plans to maintain low leverage and modest growth in distribution.
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