Kinetik To Reiterate High End Of FY23 Guidance After Q2, Analyst Forecasts Linear Growth Trajectory

Mizuho analyst Gabriel Moreen reiterated a Buy rating on Kinetik Holdings Inc. KNTK, raising the price target to $39 from $37.

Kinetik will host its second quarter 2023 results conference call on Tuesday, August 8, 2023.

The analyst expects KNTK to reiterate the 'high end' of its FY23 guidance, which may further bolster sentiment. 

The analyst thinks KNTK's quarterly earnings will exhibit a linear growth trajectory through year-end.

Moreen expects an update on the company's GCX stake sale process sometime before September.

Given its contracted nature and strong terminal value outlook, Moreen remains confident GCX could fetch a double-digit multiple (Permian pipelines should remain highly utilized).

The analyst forecasts DPS of $3.00, $3.09, & $3.18 in FY23-25, reasoning that KNTK may still be inclined to introduce some incremental capital return prior to reaching its 3.5x target. 

However, Moreen is not expecting to hear of new customer signups just yet, but the company could attract business from producer customers looking to diversify its Midstream exposure as initial gathering dedication contracts signed in the early-2010's start to expire.

Moreen currently forecasts adj EBITDA of $206 million in 2Q23 (Street: $210 million). The analyst expects growth mainly from 'Midstream Logistics' as KNTK benefits from underlying G&P growth / MVC step-ups.

Price Action: KNTK shares are trading lower by 0.14% to $35.70 on the last check Friday.