Wolfe Research upgraded Oneok (OKE, Financials) to Outperform from Peer Perform with a $110 price target, citing an attractive valuation discount compared to large-cap peers.
The company noted that short-term Bakken headwinds have caused Oneok's stock to lose favor, but the discount is warranted and offers a purchasing opportunity.According to Wolfe, Oneok's recent purchase of EnLink Midstream has somewhat lowered the quality of its portfolio; still, the value should not be much affected because accounts for just approximately 20% of the company's EBITDA. The stock price already reflects concerns about disturbances in the Bakken area, including wildfires and bad weather, therefore lowering potential negative possibilities.Because of Oneok's traditionally cautious stance, Wolfe predicts their first 2025 EBITDA estimate to be below consensus, therefore creating some upside surprises. The company also views the next earnings call, the first since the EnLink purchase concluded, as a chance for management to emphasize merger synergies and future expansion, therefore generating a possible "buy the news" moment for investors.Supported by high-return initiatives, synergy-driven efficiency, and surplus free cash flow of over $2 billion yearly through 2027, Oneok is positioned for competitive growth.
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