On Wednesday, ONE Gas Inc. (NYSE:OGS) shares received a slight increase in its price target from Mizuho, now aiming for $65.00, a step up from the previous $64.00.
The firm has chosen to maintain a Neutral stance on the company's stock. Mizuho's assessment acknowledges the current challenges faced by ONE Gas, particularly the impact of higher short-term rates.
However, the firm also notes potential benefits that may arise from these conditions, such as the possibility of higher capital costs bolstering return on equity in the forthcoming rate case decisions in Kansas and Texas.
ONE Gas's conservative approach to its 4-6% earnings per share compound annual growth rate (CAGR) predictions is seen as a positive by Mizuho, suggesting there could be more potential for upward surprises than downward risks. Despite this, the firm has made a slight reduction in its earnings estimates for ONE Gas to account for the challenges mentioned.
Mizuho's revised price target is part of a valuation shift extending into 2026, reflecting a cautious but stable outlook for ONE Gas. The projection of approximately 4.5% CAGR through 2028 aligns with the company's own anticipated range.
The path to recovery for ONE Gas is expected to be extended, yet the firm's reiteration of a Neutral rating indicates a balanced view of the company's prospects amidst the prevailing market conditions.
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