Raymond James Upgrades Williams and Downgrades Kinder Morgan



Rating changes

Investment bank and financial services company Raymond James upgraded Williams Companies (WMB) and downgraded Kinder Morgan (KMI) on June 26. The rating changes were based on sum-of-the-parts analysis in which a multi-divisional company is broken down into separate segments to see what they would be worth individually.

Raymond James downgraded KMI from “outperform” to “market perform.” Based on consensus estimates, Kinder Morgan has a mean price of $21.7 against its current market price of $20.6, indicating an estimated upside of 5% for the next year.


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KMI: Permian Highway Pipeline

On June 25, a Texas court judge cleared the way for Kinder Morgan’s Permian Highway Pipeline. Some landowners sued Kinder Morgan in April to block the pipeline construction through the Texas Hill Country. According to the Travis County District Court’s decision, the state oil and gas regulator isn’t required to set standards for routing the pipelines.

Kinder Morgan stock is trading close to its 52-week high at the moment. So far, Kinder Morgan stock has risen more than 30% in 2019. The stock hit a 52-week high last week. In comparison, the Alerian MLP ETF (AMLP) has risen ~10% during the same period.

Williams Companies

Based on Raymond James’ sum-of-the-parts analysis, it upgraded Williams Companies stock from “outperform” to a “strong buy” on June 26. Analysts have given it a mean target price of ~$32.0, which suggests an upside potential of 16% for the next 12 months. It is currently trading at $27.5. Williams Companies stock soared 2.6% yesterday after the upgrade.

Raymond James also downgraded Holly Energy Partners (HEP) from “market perform” to “underperform” yesterday.


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