Analyzing the third-quarter results of Kinder Morgan Inc
Analyst Theodore Durbin noted that the company reported third-quarter adjusted EBITDA of $1.77 billion, in line with the consensus estimate but below his estimate of $1.85 billion. The analyst attributed the shortfall to weaker natural gas segment results.
The analyst also noted that distributable cash flow, or DCF, of $0.48 per share missed his estimate of $0.52 per share, weighed down by the EBITDA shortfall and cash taxes.
- Goldman expects 8–10 percent upside to its 2020 EBITDA estimate from the TransMountain Expansion. The firm noted that federal approval for it is due in late 2016/early 2017.
- Weakness at natural gas segment was a corollary of weak Bakken and Eagle Ford gathering despite solid long-haul results.
- Goldman expects the company to increase its return to shareholders after late 2017, premised on its expectations that the company will achieve its 5x leverage target by that time frame.
Goldman lowered its 2017–2020 EBITDA estimates by 2 percent on average, reflecting volume/margin assumptions and the rollout of new project-level detail for capex-driven EBITDA. The firm also expects a 100 percent dividend increase in 2018, up from its previous estimate of 20 percent, while it lowered its share buyback target for 2019/2020.
Maintaining Rating, Price Target
Goldman maintained its Buy rating and $24 12-month price target for the shares of Kinder Morgan.
In pre-market trading, shares of Kinder Morgan were up 1.88 percent at $21.10, and at last check, they were up 1.79 percent at $21.08.
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|Oct 2016||Wolfe Research||Upgrades||Peer Perform||Outperform|
|Oct 2016||Stifel Nicolaus||Upgrades||Hold||Buy|
|Oct 2016||Credit Suisse||Upgrades||Neutral||Outperform|
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