Oneok (OKE) has received a new Hold rating, initiated by TD Cowen analyst, Jason Gabelman.
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Jason Gabelman has given his Hold rating due to a combination of factors related to Oneok’s recent strategic moves and market conditions. Oneok has invested $40 billion in acquisitions to diversify its operations away from its traditional focus on the Rockies and NGLs, moving into areas like Refined Products and the Permian NGLs. These acquisitions have provided more stable earnings streams, but the overall growth opportunities remain limited compared to its peers.
Despite the diversification efforts, the need for additional NGL infrastructure in the Rockies is minimal, and the market is already building sufficient infrastructure in the Permian. While Oneok’s EBITDA is expected to benefit from new projects and acquisition synergies, the company’s growth backlog is only 3% of its enterprise value, compared to a 7% average among peers. This limited growth potential, along with the current valuation metrics, supports the Hold rating with a price target of $91.