Balancing Near-Term Weakness and Long-Term Cash Flow Strength: Why Hess Midstream Merits a Hold Rating

Analyst Robert Kad from Morgan Stanley maintained a Hold rating on Hess Midstream Partners and keeping the price target at $38.00.

Robert Kad has given his Hold rating due to a combination of factors that balance near-term weakness against a solid long-term outlook. The latest quarter came in soft versus expectations, with weather-related disruptions weighing on throughput volumes across gas, oil, and water, and adjusted EBITDA missing consensus. These operational headwinds, combined with relatively flat near-term oil throughput expectations, limit the scope for meaningful upside in the near term and make the current valuation appear fair rather than compelling. As a result, the risk/reward profile does not yet justify a more aggressive rating.

At the same time, Kad recognizes that Hess Midstream’s longer-term fundamentals remain constructive, supporting a Hold rather than a more negative stance. Management is guiding to modest annual growth in gas volumes, mid-single-digit annual increases in net income and EBITDA through 2028, and a significantly improving free cash flow profile as capital spending declines. The company also plans to grow its distribution per share by at least 5% annually, fully funded from internal cash generation, while projecting roughly $1 billion of excess free cash flow after distributions through 2028 for additional shareholder returns and debt reduction. This mix of dependable, growing cash flows and income support underpins the Hold rating, but the absence of a clear catalyst for outsized growth or re-rating keeps Kad from moving to a Buy recommendation at this time.

In another report released yesterday, TipRanks – Anthropic also reiterated a Hold rating on the stock with a $39.00 price target.