What You Need To Know About The Kinetik Holdings Inc. (NYSE:KNTK) Analyst Downgrade Today

One thing we could say about the analysts on Kinetik Holdings Inc. (NYSE:KNTK) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the consensus from three analysts covering Kinetik Holdings is for revenues of US$1.2b in 2023, implying a measurable 6.5% decline in sales compared to the last 12 months. Per-share earnings are expected to surge 26% to US$1.40. Prior to this update, the analysts had been forecasting revenues of US$1.3b and earnings per share (EPS) of US$1.46 in 2023. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a small dip in EPS estimates to boot.

View our latest analysis for Kinetik Holdings

Analysts made no major changes to their price target of US$36.00, suggesting the downgrades are not expected to have a long-term impact on Kinetik Holdings' valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Kinetik Holdings, with the most bullish analyst valuing it at US$41.00 and the most bearish at US$34.00 per share. This is a very narrow spread of estimates, implying either that Kinetik Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 8.6% by the end of 2023. This indicates a significant reduction from annual growth of 60% over the last year. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 3.6% per year. So it's pretty clear that Kinetik Holdings' revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Kinetik Holdings revenue is expected to perform worse than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Kinetik Holdings after today.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Kinetik Holdings' financials, such as the risk of cutting its dividend. Learn more, and discover the 2 other risks we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.