Citi raises Kinetik Holdings stock target, expects dividend hike amid expansion Investing.com
On Tuesday, Citi updated its position on shares of Kinetik Holdings, Inc. (NYSE:KNTK), raised its price target to $44.00 from $42.00 previously, while maintaining a neutral rating on the stock. The review reflects expected growth following the company's recent acquisition of Durango.
Kinetik's expansion in New Mexico has reportedly generated significant commercial interest, which could lead to strong double-digit EBITDA growth for several years. This optimism is partly due to higher costs from gathering and processing (G&P), treatment, and other services at the facility.
The analyst noted that the increase in business activity is likely to result in capital expenditures (CAPEX). Capex is expected to increase to $0.4 billion by 2025 to support the development of Kings Landing I and II, additional well-connected capex, and the Eddy County Agreement. Despite the highs, the company's free cash flow ratio (FCFe) is expected to decline in 2025 but we remain optimistic.
Looking ahead, Citi expects that Kinetik Holdings will increase its share in the next announcement, which is expected in late October or early November. Although the expected increase in profits is less than 3%, it is seen as a sign of long-term growth that investors can expect.
Analyst comments highlight the balance between the company's investment in growth and potential returns to shareholders in the form of dividends.
InvestingPro Insights
As Kinetik Holdings, Inc. (NYSE:KNTK) is drawing attention for its recent Durango acquisition and subsequent expansion into New Mexico, InvestingPro data and tips provide more context for investors considering the stock. Kinetik trades at a low P/E ratio of 8.45, which is attractive compared to its near-term earnings growth. This is an indication of potential misalignment considering the company's earnings trajectory. In addition, the company showed a significant return last week, with a total price gain of 7.62%, which may suggest a positive market response to recent developments.
Investors can also be encouraged by Kinetik's dividend yield, which stands at 6.85%. This is in line with analyst expectations for increased profitability and reflects the company's commitment to returning value to shareholders. Additionally, with a market capitalization of 6.9 billion and revenue growth in the last twelve months of 15.2%, Kinetik shows strong financial metrics that may support its growth narrative. It's worth noting that while the company is trading near its 52-week high, the InvestingPro Fair Value estimate of $41.3 suggests a slight downside compared to the previous closing price of $43.79.
For those interested in exploring further, there are additional InvestingPro Tips available, which provide in-depth information on Kinetik's financial health and market performance. With these metrics in mind, investors can make more informed decisions about their interest in KNTK shares.
This article was created with the support of AI and reviewed by an editor. For more information see our T&C.
