Hess Midstream's analyst price target has been revised downward from $40 to $37 as analysts adjust expectations for slower revenue growth and profit margins. This is largely due to a tempered outlook for Bakken activity and more conservative future earnings assumptions.
Analyst Commentary
Recent analyst reports highlight a range of perspectives on Hess Midstream's valuation and future prospects following shifts in Bakken activity and updated guidance from the company. Coverage resets and target price revisions underscore debate over the company’s growth trajectory, capital allocation, and risk profile.
Bullish Takeaways- Strong commercial contracts are seen as limiting immediate downside for Hess Midstream's earnings and providing stability even if market conditions soften.
- Capital return potential remains attractive, as reduced capital expenditure needs may allow for continued dividend growth and the opportunity for additional buybacks.
- Some analysts still see the possibility of upside scenarios, particularly if strategic corporate actions such as a potential buyout materialize.
- Management's focus on maintaining a disciplined capital strategy is viewed positively for supporting longer-term shareholder returns.
- Expectations for EBITDA growth have been broadly reset. Estimates now call for flat performance in 2026 due to decreased Bakken rig activity.
- Growth is now closely tied to Chevron's operational decisions in the Bakken. This introduces greater uncertainty compared to prior plans.
- Analysts express concerns that current market valuations fully reflect the company’s strengths, leaving limited room for upside appreciation.
- There is a belief that consensus forecasts remain too high, as future growth may face continued pressure from both commodity headwinds and strategic risks.
What's in the News
- The Board of Directors declared a quarterly cash distribution of $0.7548 per Class A share for Q3 2025. This represents an increase over the previous quarter, supported by strong free cash flow following recent buybacks. (Key Developments)
- Hess Midstream updated its full year 2025 gas throughput guidance. The company lowered expectations due to weather, maintenance, and reduced third-party volumes. Gas gathering is now forecast at 455 to 465 MMcf per day, and processing at 440 to 450 MMcf per day. (Key Developments)
- Full year and third quarter 2025 net income guidance was revised downward, with expected results to be at or near the lower end of prior ranges. (Key Developments)
- The company authorized a share buyback plan, which includes an agreement to repurchase up to $70 million of Class A shares through an accelerated share repurchase program with JPMorgan Chase Bank. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has decreased from $40 to $37, reflecting a more conservative outlook.
- Discount Rate edged down slightly from 7.49% to 7.47%, suggesting a marginally lower risk assessment.
- Revenue Growth projections have fallen significantly from 6.13% to 3.20%.
- Net Profit Margin estimates have declined from 33.53% to 31.62%.
- Future P/E ratio is now forecast at 13.46x, up from 12.63x, indicating a higher valuation on forecasted earnings.
Have other thoughts on Hess Midstream?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeDisclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.