On Thursday, Citi maintained its Neutral rating on shares of Kinetik Holdings Inc. (NYSE:KNTK) with a steady price target of $42.00. The firm anticipates Kinetik Holdings to update its 2024 EBITDA and capital expenditure (capex) guidance alongside its earnings report. Kinetik's estimated 2024 EBITDA is projected at $979 million, surpassing the average Street estimate of $958 million and the previous high-end guidance of $960 million.
The increased EBITDA forecast is attributed to a combination of a half-year contribution from Durango assets and a stronger-than-anticipated performance in the company's base business. This is expected to compensate for the partial-year impact of the GCX sale. Additionally, the 2024 capex guidance is likely to rise by over $100 million, reflecting the Eddy County expansion and capital expenditures for the Kings Landing plant.
While management may discuss factors influencing the 2025 EBITDA, they are not expected to provide concrete guidance for that year. For the second quarter of 2024, Citi projects an EBITDA of $239 million, slightly above the Street consensus of $234 million. This estimate accounts for a recovery in production after winter weather disruptions, opportunities in spread margins, routine maintenance, and the inclusion of six days worth of Durango assets, slightly offset by a month's impact from the GCX sale.
The company's dividend growth strategy remains a topic of interest. It is suggested that management is considering the balance between the need for cash to fund growth initiatives and the potential for accelerating dividend growth in the upcoming year.
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