Credit Suisse Upgrades Kinder Morgan (KMI) to Outperform

October 20, 2016 6:26 AM EDT
Get Alerts KMI Hot Sheet
Price: $21.09 -0.52%

Rating Summary:
    17 Buy, 5 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 21 | Down: 36 | New: 11
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Credit Suisse upgraded Kinder Morgan (NYSE: KMI) from Neutral to Outperform with a price target of $26.00 (from $23.00).

Analyst John Edwards commented, "3Q EBITDA beat (~1% vs Street and ~3% vs CS), KMI management is still guiding to 3% below the '16 EBITDA budget and 4% below the DCF budget consistent with last quarter and KMI affirmed that delevering to be 0.2x better than budget (to 5.3x Debt/EBITDA by YE) due to the sale of 50% of SNG to SO (The South Rises) which closed 9/1/16. Management cut another $100mm from growth cap ex, to $2.7B and the project backlog fell $500mm more to $13.0B. We forecast below 5.0x Debt/EBITDA by 2Q18. Chairman Rich Kinder indicated the working assumption is to have excess cash over dividends to be able to cover 50% of normalized cap ex (~$2-$3B) when the balance sheet reached below 5.0x leverage. In response, we are raising the dividend to $0.25/share ($1.00 annualized) beginning with 3Q18 declaration (with ~15% CAGR the next 5 years thereafter). In our blended valuation approach, this removes the drag from the dividend component, prompting us to raise our TP by $3, to $26, and our rating on the shares to Outperform."

For an analyst ratings summary and ratings history on Kinder Morgan click here. For more ratings news on Kinder Morgan click here.

Shares of Kinder Morgan closed at $20.71 yesterday.



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