Mizuho Starts Kodiak Gas Services Inc (KGS) at Outperform

Mizuho analyst Gabriel Moreen initiates coverage on Kodiak Gas Services Inc (NYSE: KGS) with a Outperform rating and a price target of $36.00.

The analyst comments: "We believe KGS has visibility to growth over the medium-term (~8% EBITDA CAGR), supported by tailwinds for the compression industry at-large and a well-defined capital allocation framework allowing for higher capex intensity than peers. KGS is differentiated versus contract compression peers by virtue of its favorable Permian concentration and younger fleet, which should translate to better growth and higher profit margins. KGS has been more aggressive than peers in pursuing growth – a strategy we endorse. Still, we believe KGS' capital allocation framework supports a higher capex intensity as capitalization is more of a 'finished product' than peers. Current valuation trades at a discount to peers (6.6x '26E EV/EBITDA vs. compression avg: 7.5x), but we believe KGS could re-rate as the Street further appreciates (1) the compression industry's macro tailwinds, and (2) KGS' visible growth outlook."

For an analyst ratings summary and ratings history on Kodiak Gas Services Inc click here. For more ratings news on Kodiak Gas Services Inc click here.

Shares of Kodiak Gas Services Inc closed at $29.21 yesterday.

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