On Tuesday, Wolfe Research adjusted its rating on shares of DT Midstream (NYSE:DTM), upgrading the stock from Underperform to Peer Perform. The revision follows the company's recent fourth-quarter update, which provided insights into the long-term growth targets and improved transparency in disclosures. Additionally, DT Midstream has delayed a unique carbon capture and storage (CCS) project.
The firm's decision to upgrade DT Midstream's stock rating is influenced by several key developments outlined in the company's quarterly update. These include financial outlooks for the years 2024 and 2025 that are largely aligned with current expectations, suggesting a stabilization in the company's performance.
The analyst at Wolfe Research highlighted the significance of natural gas prices, which are currently near their 2020 lows. The historical trend shows that natural gas prices typically do not remain below $2 for an extended period, indicating potential for a price rebound, which could be favorable for DT Midstream.
The delay of DT Midstream's unique CCS project was also noted as a factor in the rating upgrade. The CCS project is part of the company's long-term growth strategy, and its postponement has been considered in the re-evaluation of the stock.
The upgrade reflects a more neutral stance on the stock, suggesting that DT Midstream's current performance and future prospects are now viewed as being on par with its peers. Wolfe Research's updated rating indicates a shift in expectations, aligning DT Midstream with industry standards.
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