Analyst Robert Kad from Morgan Stanley maintained a Sell rating on Antero Midstream (AM – Research Report) and keeping the price target at $16.00.
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Robert Kad’s rating is based on several factors that point to a cautious outlook for Antero Midstream. The company’s free cash flow before dividends was higher than Morgan Stanley’s estimates, yet the free cash flow after dividends was also significantly greater, suggesting that cash reserves might not be as robust after shareholder payouts. Additionally, the company’s net debt to EBITDA ratio remained stable, indicating no substantial improvement in leverage.
Another critical consideration is the company’s performance in processing and fraction volumes, which slightly exceeded Morgan Stanley’s expectations. However, these positive metrics were not enough to outweigh concerns about financial sustainability and potential pressure on liquidity. Lastly, despite a modest increase in adjusted EBITDA compared to consensus, the impact on the investment thesis remains unchanged, contributing to the Sell rating. Overall, these elements combined suggest a limited upside for investors, justifying the Sell recommendation.
Kad covers the Energy sector, focusing on stocks such as MPLX, Antero Midstream, and Enterprise Products Partners. According to TipRanks, Kad has an average return of 12.4% and a 67.94% success rate on recommended stocks.