Kodiak Gas Services: Durable Contracted Model and Power-Related Growth Drive Buy Rating

William Blair analyst Neal Dingmann has maintained their bullish stance on KGS stock, giving a Buy rating on January 20.

Neal Dingmann has given his Buy rating due to a combination of factors that highlight Kodiak Gas Services’ durable business model and favorable industry positioning. He points to Kodiak’s largely contracted revenue base with built‑in inflation protections and no direct commodity price risk, supported by strong U.S. natural gas production and a structurally tight compression market, especially in the Permian. The company’s expectation of continued horsepower growth, fully contracted expansion capital, and exceptionally long equipment lead times indicate a persistent supply/demand imbalance that should underpin volume and margin strength. Additionally, Kodiak’s operational outperformance versus peers, driven by high fleet uptime and a focus on large-horsepower units, contributes to sticky customer relationships and resilient utilization.

Dingmann also underscores Kodiak’s expanding opportunity set in power-related applications as a key reason for his positive stance. With ERP implementation complete and leverage nearly at its long-term target, the company is now in a position to pursue both organic projects and accretive M&A, including purchase‑leaseback structures and adjacent service offerings. A major strategic avenue is distributed power, where Kodiak is already constructing a sizable compression-powered facility for a midstream client and evaluating broader entry into power generation, particularly for behind‑the‑meter solutions serving data centers and constrained grid infrastructure. Beyond the Permian, he notes additional growth potential in other gas‑rich basins such as the Eagle Ford, Marcellus, and Powder River, which should benefit from increasing LNG and power demand, further supporting the Buy rating.

In another report released on January 20, Mizuho Securities also maintained a Buy rating on the stock with a $44.00 price target.

Based on the recent corporate insider activity of 38 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of KGS in relation to earlier this year.