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What Do Analysts Recommend for Kinder Morgan?

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Analyst ratings for Kinder Morgan

In this article, we’ll look at what Wall Street analysts recommend for Kinder Morgan (KMI). Currently, ~52.6% of analysts rate Kinder Morgan a “buy,” ~42.1% rate it a “hold,” and ~5.3% rate it a “sell.”

The median broker target price of $19.5 for KMI implies a ~39.5% price return in the next 12 months from its January 14, 2016, closing price of $13.9. KMI’s MLP peers EnLink Midstream Partners (ENLK) and Energy Transfer Partners (ETP) have “buy” ratings from 61.5% and 86.7% of analysts, respectively. 50.0% of analysts rate Williams Partners (WPZ) a “hold.” KMI constitutes 0.26% of the iShares Russell 1000 Value ETF (IWD).

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Outlook for Kinder Morgan

Investors should consider the following positives and negatives to guide their investment decisions about KMI.

Positives

  • KMI has a five-year project backlog of $21.3 billion.
  • KMI is expected to benefit from the rise in natural gas demand from power utility companies in the long run.

Negatives

  • KMI is highly leveraged with a debt-to-EBITDA multiple of 5.8x.
  • With its recent dividend cut, KMI is no longer an attractive income opportunity.
  • KMI is exposed to commodity prices through its CO2 and natural gas midstream businesses.
  • Out of the $21.3 billion five-year project backlog, $5.4 billion comes from the expansion of the Trans Mountain Pipeline System. The project has been mired in regulatory hurdles for almost two years. British Columbia’s government recently opposed the project on safety and environmental concerns.

For more pre-earnings coverage on midstream companies, check out our Master Limited Partnerships page.

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