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Investing.com - William Blair initiated coverage on Kodiak Gas Services Inc (NYSE:KGS) with an Outperform rating on Tuesday. The stock, currently trading at $32.95, appears slightly undervalued according to InvestingPro Fair Value estimates.
The research firm cited Kodiak’s position as the compression industry leader, which positions it to benefit from continued natural gas production growth in the Permian Basin. With a market capitalization of $2.86 billion and impressive revenue growth of 19.43% over the past year, Kodiak also offers investors a substantial 5.95% dividend yield.
William Blair noted that while Permian oil production growth will likely slow due to lower prices, new and existing basin wells continue to become gassier, creating increased demand for compression services.
The firm highlighted Kodiak’s potential to take over existing exploration and production (E&P) compression operations, which provides opportunities similar to mergers and acquisitions.
William Blair expects Kodiak to announce strategic purchases from large customers, according to the research note.
In other recent news, Kodiak Gas Services reported its third-quarter 2025 financial results, showing a mixed performance. The company missed its earnings per share (EPS) forecast, posting $0.36 instead of the expected $0.42, but exceeded revenue expectations with $322.74 million compared to the anticipated $234.76 million. This revenue beat marked a significant positive surprise of 37.48%. Following these results, RBC Capital raised its price target for Kodiak to $45, citing strong demand, while Stifel increased its target to $48, maintaining a Buy rating due to a positive growth outlook. In addition, Kodiak announced the pricing of an underwritten offering of 10 million shares at $33.60 each by Frontier TopCo Partnership, L.P., an EQT Infrastructure affiliate. Kodiak will not receive proceeds from this offering but plans to repurchase 1 million shares under its existing program. These developments underscore the company’s strategic financial maneuvers amid its recent earnings performance.
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