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Investing.com - Wolfe Research upgraded Kinetik Holdings, Inc. (NYSE:KNTK) from Peerperform to Outperform on Wednesday, setting a price target of $45.00. The company, currently valued at $5.9 billion, has seen its stock trading near its 52-week low of $35.74, despite maintaining a substantial 8.71% dividend yield.
The research firm cited the company’s position as a Permian pure play gathering and processing business with re-contracting tailwinds that should drive above-average growth. Supporting this outlook, InvestingPro data shows impressive revenue growth of 19.71% over the last twelve months. Wolfe Research also highlighted Kinetik’s stable non-operator interests in the Permian Highway gas pipeline and Shin Oak NGL pipeline as complementary assets.
Despite operational challenges and weaker commodity prices affecting Kinetik’s performance this year, with the stock down 33.71% year-to-date, Wolfe Research sees an attractive risk-reward opportunity. The firm noted that Kinetik has been the worst performer in its coverage year-to-date, pushing its valuation to a discount compared to master limited partnerships. This aligns with InvestingPro’s Fair Value analysis, which suggests the stock is currently undervalued.
Wolfe Research believes near-term financial risks are already reflected in the recent stock price weakness, suggesting investors might soon begin to buy into the company’s story given the upcoming structural re-contracting tailwinds.
The firm also identified increased option value on a potential takeout, noting that larger integrated players may become more eager to secure volumes on their systems due to the Permian NGL pipeline overbuild situation.
In other recent news, Kinetik Holdings Inc. reported its second-quarter 2025 earnings, posting an earnings per share (EPS) of $0.33, which exceeded the forecasted $0.25 by 32%. However, the company experienced a revenue shortfall, recording $426.74 million against an expected $436.91 million. Despite this, investor sentiment appeared positive, as reflected in the stock’s pre-market rise. Goldman Sachs maintained a Buy rating on Kinetik Holdings but adjusted its price target to $47.00 from $49.00, citing a project delay. Interactive Brokers Group Inc. is set to join the S&P 500 index, replacing Walgreens Boots Alliance Inc. This change follows Walgreens’ acquisition by Sycamore Partners, which is anticipated to close soon. These developments reflect significant shifts and expectations within the involved companies.
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