ONEOK (OKE): Valuation Perspective Following New Permian Pipeline Venture and Analyst Price Target Update

ONEOK (OKE) has found itself in the spotlight after two moves that have investors leaning in. First, despite receiving a reduced price target from BofA, the firm kept its buy rating intact. At nearly the same time, ONEOK revealed it would join a new joint venture building a major natural gas pipeline from the Permian Basin to the Gulf Coast. This underscores not just organic growth but also the realization of synergies from its recent acquisitions. These developments are heightening market attention, especially given the strategic implications for ONEOK’s future cash flows and competitive positioning.

Zooming out, this wave of news arrives during a choppy stretch for the stock. ONEOK shares slipped 2.76% just as the broader market was moving higher, reflecting a mix of anticipation and nervousness ahead of the company’s next earnings report. The report is expected to show considerable year-over-year EPS growth. Yet, over the past year, the stock is down 20%. Still, over three and five years, the long-term returns remain firmly positive, so the longer trend tells a different story than the recent selloff. Momentum currently feels uncertain as investors digest fresh project announcements and changing expectations.

With all these factors in play, the real question is whether ONEOK’s current price factors in its ongoing growth story or if there is still an opportunity for value-minded investors to act.

Most Popular Narrative: 24.5% Undervalued

According to the leading narrative, ONEOK is seen as undervalued by a significant margin. Analysts forecast a strong growth trajectory while recognizing key challenges facing the company and the broader sector.

Persistent growth in global demand for U.S. natural gas and NGLs, driven by increasing international energy needs and continued coal-to-gas switching, supports long-term volume throughput and higher utilization rates across ONEOK's midstream and export infrastructure. This directly underpins future revenue and EBITDA growth. Ongoing expansions and capital investments in key areas like the Permian and Delaware Basins (for example, new processing plants and pipeline connections) position ONEOK to capture incremental fee-based volumes and benefit from robust U.S. shale production, leading to higher top-line growth and enhanced earnings stability.

Curious what drives that bold valuation? There is one key financial forecast that forms the backbone of this bullish case, fueled by ambitious growth targets and a valuation metric usually reserved for market favorites. Want to see the full breakdown and the assumption that tilts the narrative toward such a premium? The specifics may surprise you.

Result: Fair Value of $96.11 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, falling profit margins or persistent commodity price volatility could undermine future earnings and challenge the bullish view on ONEOK’s valuation.

Find out about the key risks to this ONEOK narrative.

Another View: Testing with Discounted Cash Flow

While analysts project significant upside using traditional price-based methods, our DCF model paints a similar picture. This suggests the shares still trade well below what long-term cash flows can justify. But can these cash flows be delivered?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding ONEOK to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own ONEOK Narrative

If you see the numbers differently or want to chart your own course, you can quickly draft a personalized narrative to fit your research. Do it your way

A great starting point for your ONEOK research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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