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Is ONEOK Positioned Well Enough to Continue Growing Its Earnings?

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Dec. 4 2020, Updated 10:53 a.m. ET

Analyst recommendations for OKE

Of the analysts surveyed by Bloomberg, 12% rated ONEOK (OKE) a “buy,” and 76% rated it a “hold.” About 12% rated it a “sell.”

The consensus target price for ONEOK in one year is $41.90. Over the same period, the low and high target prices for the stock are $22 and $49, respectively. Currently, ONEOK’s shares trade near $43.90. If it attains the median target price within a year, it would mean a downside of 4.5% for investors.

In comparison, 25% of analysts rated ONEOK Partners (OKS) a “buy,” 56% rated it a “hold,” and 19% rated it a “sell.” ONEOK operates as a pure-play general partner of ONEOK Partners.

The above table shows recommendations and target prices for ONEOK and ONEOK Partners from some of the brokers surveyed.

As for its peers, 43% rate Kinder Morgan (KMI) a “buy,” and 86% rate Enterprise Products Partners (EPD) a “buy.”

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OKE’s 2016 guidance

ONEOK maintained its guidance for 2016 in its 2Q16 earnings release. The company expects 2016 net income of ~$360 million. OKE expects to generate cash flow available for dividends of ~$675 million in 2016. It has provided a dividend coverage ratio guidance of ~1.3x for the year.

ONEOK’s steps to reduce commodity price exposure in its natural gas gathering and processing segment seem to be working well for the company.

Terry K. Spencer, president and chief executive officer of ONEOK, said, “ONEOK’s and ONEOK Partners’ proactive approach to financial decision-making, increased fee-based earnings and continued natural gas and natural gas liquids volume growth have positioned us well for the remainder of 2016.”

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