On Tuesday, Seaport Global Securities updated its outlook on ONEOK Inc (NYSE:OKE) stock, a midstream service provider in the natural gas industry, by increasing the price target to $89 from the previous target of $88. The firm sustained its Buy rating on the stock.
The adjustment comes with expectations of growth in ONEOK's cash flow, driven by increasing synergies and new projects in refined product markets, as well as the expansion of the West Texas LPG pipeline in the Permian region.
While the Bakken region has historically been a significant growth area for ONEOK, there are indications that the competitive dynamics in this region could be shifting. The full impact of these changes is yet to be seen.
Seaport also noted ONEOK's progress in reducing leverage, particularly following the completion of the MMP acquisition. This progress is seen as positioning the company to effectively continue its stock buyback program. Moreover, the firm's positive free cash flow (FCF) is expected to give management the flexibility to pursue accretive projects or to accelerate the return of cash to investors.
The revised price target reflects a modest increase, implying a belief in the company's potential for sustained growth and value creation for shareholders. Seaport's commentary highlights ONEOK's strategic moves and financial management as key factors underpinning the positive outlook.
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