Kinder Morgan (KMI): Raising PT After Non Deal Roadshow - UBS
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UBS analyst, Shneur Gershuni reiterated his Buy rating on shares of Kinder Morgan (NYSE: KMI) and raised the price target to $27 after travelling with KMI to meet with investors in Europe. With 2015 and credit concerns mostly in the rear view mirror, investors were looking for color on the outlook for a return of capital through dividends or share buybacks.
In terms of dividend coverage level, no guidance was provided; however, we got the sense that going forward as a funding strategy KMI would like to fund the equity portion of its capex backlog through retained DCF. If we assume an annual capex budget of $4B that would translate into $2B in retained DCF or a coverage ratio of 1.5x based on 2020E which would be a big step-down from current coverage levels of 4.0x.
As far as asset sales go, KMI does not see itself as a JV seller of existing assets outside of the unique circumstances with SNG.
The PT increases to $27 from $24.
Shares of Kinder Morgan closed at $22.12 yesterday.
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