In a report released yesterday, Keith Stanley from Wolfe Research downgraded DT Midstream (DTM – Research Report) to a Sell, with a price target of $53.00.
Keith Stanley has given his Sell rating due to a combination of factors affecting DT Midstream’s growth prospects and investment appeal. The downgrade is primarily driven by concerns over the deceleration of growth as the company faces a smaller committed project backlog and diminished activity in the Haynesville region. These conditions are exacerbated by lower natural gas prices, which further dampen the likelihood of a recovery in the near term. The market appears to be adequately supplied with natural gas through 2024, which presents challenges for DT Midstream in identifying new and lucrative growth opportunities.
Furthermore, Stanley’s analysis suggests that DT Midstream’s anticipated earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year 2024, which projects a mere 3% year-over-year growth, may be overly optimistic. This projection is conservative compared to the company’s historical growth rate of 8-10%. The potential carbon capture, transportation, and sequestration (CCS) project, despite being significant, is unlikely to ignite investor interest due to uncertainties in the capital costs and returns. There is also caution towards DT Midstream’s ability to pioneer in this emerging field, especially when larger, more established companies have not yet fully committed to such initiatives. Stanley’s report concludes with a trimmed EBITDA estimate for the coming years and a target price set at $53 per share, further justifying the Sell rating for DT Midstream.
According to TipRanks, Stanley is a 4-star analyst with an average return of 12.7% and a 61.54% success rate. Stanley covers the Energy sector, focusing on stocks such as Enbridge, Equitrans Midstream, and TC Energy.
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DT Midstream (DTM) Company Description:
The aim of the VanEck Vectors¿ Multi-Asset Conservative Allocation UCITS ETF is to follow the Multi-Asset Conservative Allocation Index as closely as possible.
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