On Tuesday, Mizuho Securities adjusted its outlook on DT Midstream (NYSE:DTM), a natural gas pipeline company, by increasing its price target to $72 from the previous $65 while maintaining a neutral rating on the stock. The revision reflects the company's year-to-date performance, which has been notably strong, drawing attention to the robust demand for Midstream's power services.
DT Midstream's performance throughout the year has been buoyed by the market's focus on the company's pipeline assets, which are expected to contribute 63% of the adjusted EBITDA for 2023, and its operations outside of the Haynesville region, accounting for 75% of the adjusted EBITDA. These aspects of DT Midstream's business, previously not given much emphasis, are now at the forefront of investor interest.
Despite anticipation of a quarter-over-quarter decline in the second quarter of 2024's adjusted EBITDA and a decrease in gathering volume in the Haynesville area, the firm suggests that investors might overlook these weaker points. This is contingent upon DT Midstream providing a clearer picture of its growth potential beyond the comprehensive four-year capital expenditure backlog it recently detailed.
Mizuho's revised price target comes with the expectation that the market will respond positively to DT Midstream's second-quarter commentary, even if it includes cautious views on Haynesville. The firm slightly raised its estimates and price target based on these factors but remains neutral on the stock due to its fair valuation. The new price target of $72 reflects Mizuho's adjusted expectations for DT Midstream.
In other recent news, DT Midstream has been making significant strides in the energy sector. The company reported a robust start to Q1 2024, with Q1 adjusted EBITDA at $245 million and a Q1 dividend of $0.735 per share. DT Midstream is expected to hit the higher end of its 2024 EBITDA guidance range, as predicted by Citi, which maintains a neutral stance on the company with a price target of $62.
Meanwhile, Wells Fargo has upgraded DT Midstream from Equal Weight to Overweight, raising the stock price target to $77. This upgrade reflects DT Midstream's strong positioning in the natural gas sector and the anticipated increase in demand for power and gas over the next decade.
DT Midstream has also announced significant expansions in its pipeline systems and a promising carbon capture and sequestration project in Louisiana. The company is looking at final investment decisions on several key projects, including the LEAP Phase 4, CCS, Vector, Nexus, and Utica initiatives, all slated for in-service dates between 2025 and 2026.
InvestingPro Insights
As DT Midstream (NYSE:DTM) garners attention with its strong year-to-date performance, investors might find the latest data from InvestingPro particularly insightful. With a market capitalization of $7.21 billion and a P/E ratio standing at 17.91, the company's financial stability is evident. The company's commitment to shareholder returns is highlighted by its dividend track record, having raised its dividend for three consecutive years, a testament to its financial health and commitment to investors.
An InvestingPro Tip notes that DT Midstream is trading at a high revenue valuation multiple, which aligns with Mizuho Securities' neutral stance despite the price target increase. The company's stock has also been trading near its 52-week high, showcasing the market's positive reception to its operational performance. Furthermore, DT Midstream has experienced a strong return over the last three months, with a 20.63% total price return, reinforcing the stock's current momentum.
For those looking to delve deeper into DT Midstream's prospects and performance, additional InvestingPro Tips are available. With a total of 11 InvestingPro Tips, investors can gain a more comprehensive understanding of the stock's potential. To access these insights and more, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.