On Wednesday, Citi reaffirmed its Buy rating on shares of EnLink Midstream, LLC (NYSE:ENLC), with a steady price target of $15.00. The firm's outlook is based on the anticipation of EnLink's third-quarter 2024 EBITDA reaching $325 million, slightly falling short of the Street's average estimate of $330 million. This forecast is driven by volume growth in the Permian and Oklahoma regions, along with some seasonal effects in Louisiana.
EnLink Midstream is expected to see a sequential increase in its financial performance due to these factors. However, Citi does not foresee a significant contribution from the Matterhorn project until the fourth quarter of 2024. Additionally, EnLink Midstream is positioned to potentially approve the relocation of a Permian processing plant, which could be a more cost and time-efficient alternative to constructing a new facility.
Regarding guidance, EnLink Midstream anticipates its 2024 EBITDA to align closely with the midpoint of its provided guidance. Although a considerable improvement is necessary in the second half of 2024 to meet this target, the company has consistently expressed confidence in reaching its goal.
The market's attention has shifted beyond quarterly results to Oneok Inc.'s (OKE) upcoming offer to acquire the remaining interest in EnLink Midstream. Following this development, EnLink Midstream is expected to temporarily halt its public common stock buybacks.
In other recent news, EnLink Midstream has announced a series of significant financial developments. The company entered into a Credit Agreement Amendment, allowing for up to $500 million of obligations under its accounts receivable securitization facility to be excluded from the leverage ratio calculation. This move is in preparation for ONEOK (NYSE:OKE)'s impending acquisition of equity interests in EnLink.
The company also reported a robust second quarter in 2024, with $306 million in adjusted EBITDA and a repurchase of $50 million of its units. Furthermore, EnLink Midstream finalized an agreement for a public offering of $500 million in senior notes, guaranteed by its subsidiary, EnLink Midstream Partners, LP.
In terms of analyst notes, EnLink Midstream's stock was downgraded from Overweight to Equalweight by both Morgan Stanley and Wells Fargo, with a price target set at $15.00. The downgrades come on the heels of ONEOK's announcement to acquire a controlling interest in EnLink Midstream.
ONEOK, Inc. has agreed to acquire Global Infrastructure Partners' controlling interest in EnLink Midstream, a deal that includes an acquisition of all equity interests in both EnLink Midstream and its subsidiaries. This transaction, expected to close in late 2024, marks a considerable expansion of ONEOK's midstream services.
InvestingPro Insights
As Citi maintains its optimistic stance on EnLink Midstream, LLC (NYSE:ENLC), it's important for investors to consider additional metrics that could influence their investment decisions. According to real-time data from InvestingPro, EnLink Midstream currently has a market capitalization of approximately $6.65 billion and is trading at a price-to-earnings (P/E) ratio of 44.88, which is high compared to industry averages, indicating a premium valuation for its earnings. Adjusted figures for the last twelve months as of Q2 2024 show a P/E ratio of 38.65, which still suggests a high valuation.
The company's revenue for the last twelve months as of Q2 2024 stands at $6.833 billion, with a notable decline of 14.01% in revenue growth during the same period. However, it's worth noting that EnLink Midstream has seen a 2.18% quarterly revenue growth in Q2 2024, hinting at potential recovery. Additionally, the firm has maintained dividend payments for 11 consecutive years, with a current dividend yield of 3.64%, which could be appealing for income-focused investors.
Among the InvestingPro Tips, two are particularly relevant in the context of the article: EnLink Midstream's stock price movements are quite volatile, which could impact short-term investment strategies; and the company is trading near its 52-week high, at 97.94% of this peak value, reflecting strong recent performance. For investors seeking a deeper dive into EnLink Midstream's financial health and future prospects, there are six additional InvestingPro Tips available on https://www.investing.com/pro/ENLC.
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