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Why Are Analysts Bullish on Williams Companies?

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Analysts’ recommendations

Williams Companies (WMB), Williams Partners’ (WPZ) C-corporation general partner, is sixth among Wall Street’s top seven midstream companies. Of the analysts covering the stock on June 18, 79% recommended “buy,” and 21% recommended “hold.” Seaport Global last initiated coverage on stock with a “buy” rating. Williams has seen five rating updates since the start of this year: two downgrades, two new coverage initiations, and one upgrade.

Peers Energy Transfer Equity (ETE) and Enbridge (ENB) have received “buy” ratings from 77.8% and 53.8% of analysts covering the stocks, respectively, while 52.6% of analysts covering ONEOK (OKE) recommend “hold.”

WMB is currently trading below the low range ($28) of analysts’ target prices. Its average target price of $33.90 implies a ~25% upside based on its current price.

Outlook

Williams Companies’ long-term outlook looks positive considering its lower direct commodity price exposure, strong natural gas demand outlook, improved credit profile following simplification of its ownership structure, and significant expansion opportunities. For more on its simplification transaction, read Williams Partners Up 7% on Merger Announcement with GP.

Williams Companies’ forward EV[1.enterprise value]-to-EBITDA multiple was 10.5x as of June 18, below its one-year average of 10.9x. WMB’s current forward EV-to-EBITDA multiple is below its peers’ median of 12.1x. In the next article, we’ll look at analysts’ ratings for Energy Transfer Partners (ETP).

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