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Hess Midstream Partners (HESM)
NYSE:HESM
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Hess Midstream Partners (HESM) AI Stock Analysis

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HESM

Hess Midstream Partners

(NYSE:HESM)

Rating:75Outperform
Price Target:
$43.00
▲(6.75%Upside)
Hess Midstream Partners scores well due to its strong financial performance, attractive valuation, and positive earnings call outlook. The recent stock buyback plan further supports shareholder value. However, technical analysis indicates a neutral momentum and high debt levels are a concern.
Positive Factors
Earnings and Returns
Analyst's recommendation for HESM is at Equal-weight, with a price target reflecting a 29.0% total-return upside including a 7.4% dividend yield.
Stock Buybacks
There is an expectation of nearly $2.5 billion in stock buybacks over the next five years, representing more than 25% of the company's market cap.
Strategic Transactions
A potential buy-in transaction by Chevron could enable the company to gain more direct control of its midstream operations, allow for better upstream integration, and modestly reduce operating costs.
Negative Factors
Market Risks
The main risk to the thesis is oil prices falling below $60 per barrel, which could lead to reduced drilling activity and slower growth.

Hess Midstream Partners (HESM) vs. SPDR S&P 500 ETF (SPY)

Hess Midstream Partners Business Overview & Revenue Model

Company DescriptionHess Midstream Partners LP (HESM) is a leading midstream energy company primarily engaged in processing, storing, and transporting natural gas, crude oil, and natural gas liquids (NGLs) in the United States. As a key player in the midstream sector, HESM offers essential infrastructure and logistical support to its customers, facilitating the efficient movement of energy commodities from production sites to end-users and markets. The company operates a network of strategically located assets, including pipelines, terminals, and processing facilities, to support its integrated operations.
How the Company Makes MoneyHess Midstream Partners generates revenue through fee-based contracts for its midstream services, which include the gathering, processing, storage, and transportation of natural gas, crude oil, and NGLs. The company primarily serves Hess Corporation, its parent company, under long-term fee-based agreements, ensuring a steady and predictable revenue stream. Additionally, HESM collaborates with other third-party producers, leveraging its extensive infrastructure to provide reliable midstream solutions. This fee-based model helps protect Hess Midstream from direct commodity price exposure, as its earnings are more dependent on the volume of hydrocarbons transported rather than their market price. The company's strategic partnerships and focus on operational efficiency further enhance its financial performance and growth potential.

Hess Midstream Partners Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 6.62%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with Hess Midstream demonstrating resilience and strong performance despite weather challenges. While there were some negative impacts from weather on throughput and financial metrics, the reaffirmation of guidance, strong shareholder returns, and a robust financial position provided a largely optimistic view.
Q1-2025 Updates
Positive Updates
Strong Operating and Financial Performance
Hess Midstream delivered strong operating and financial performance despite challenging weather. Throughput volumes were 424 million cubic feet per day for gas processing, 125,000 barrels of oil per day for crude terminaling, and 126,000 barrels of water per day for water gathering.
Bakken Production Growth
Hess Corporation reported first-quarter net production in the Bakken averaged 195,000 barrels of oil equivalent per day. They plan to run a four-rig drilling program in 2025 and expect Bakken net production to rise to 210,000-215,000 barrels of oil equivalent per day in the second quarter, up approximately 9% at the midpoint compared to the first quarter.
Reaffirmed Guidance
Hess Midstream reaffirmed its full-year 2025 financial and throughput guidance, projecting increased volumes and revenues in the second quarter despite higher seasonal maintenance activity.
Shareholder Returns
Since 2021, $1.95 billion has been returned to shareholders through accretive repurchases. Distribution per Class A share has increased by approximately 57% since 2021.
Strong Financial Position
Hess Midstream's leverage is approximately 3.1 times adjusted EBITDA, one of the lowest among peers, highlighting strong balance sheet strength.
Negative Updates
Weather Impact on Throughput Volumes
Throughput volumes were down compared to the fourth quarter due to severe winter weather in January and February, though partially offset by higher third-party oil volumes and a strong recovery in March.
Decrease in Net Income and Adjusted EBITDA
Net income for the first quarter of 2025 was $161 million, down from $172 million in the fourth quarter of 2024. Adjusted EBITDA decreased to $292 million from $298 million in the fourth quarter of 2024, mainly due to lower volumes and revenues from severe winter weather.
Company Guidance
During the first quarter of 2025, Hess Midstream demonstrated robust operational and financial performance despite challenging weather conditions, with throughput volumes averaging 424 million cubic feet per day for gas processing, 125,000 barrels of oil per day for crude terminaling, and 126,000 barrels of water per day for water gathering. The company reaffirmed its full-year financial and throughput guidance, expecting net income of $715-765 million and adjusted EBITDA of $1,235-1,285 million. Capital expenditures are projected to be approximately $300 million, with adjusted free cash flow anticipated between $735-785 million for the year. The company aims for sustainable cash flow growth and plans to increase distribution per Class A share by at least 5% annually through 2027. Additionally, Hess Midstream plans to generate over $1.25 billion in financial flexibility by 2027, facilitating multiple unit repurchases yearly. The first quarter adjusted EBITDA was $292 million, with a gross margin of approximately 80%, and net income was $161 million.

Hess Midstream Partners Financial Statement Overview

Summary
Hess Midstream Partners demonstrates strong profitability with high margins and positive revenue growth. Cash flow management is robust, though free cash flow growth fluctuations and high debt levels pose risks.
Income Statement
88
Very Positive
Hess Midstream Partners demonstrates strong profitability with consistently high gross and net profit margins over the years. The company has shown a positive revenue growth trend, with a notable increase from the previous year. EBIT and EBITDA margins are robust, reflecting efficient operational performance.
Balance Sheet
72
Positive
The balance sheet indicates a high level of debt relative to equity, with a rising debt-to-equity ratio, which could pose a financial risk. However, the company maintains a reasonable equity ratio, showing a stable asset base. Return on equity remains strong, indicating effective use of shareholder funds.
Cash Flow
83
Very Positive
Hess Midstream Partners has shown strong cash flow management with consistent free cash flow generation. The operating cash flow to net income ratio suggests healthy cash conversion. However, the free cash flow growth has seen some fluctuations, which could be an area of concern if it persists.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.50B1.35B1.28B1.20B1.09B
Gross Profit1.29B1.04B1.09B1.04B935.00M
EBITDA1.14B1.02B972.50M903.40M733.40M
Net Income223.10M118.60M620.60M617.80M484.80M
Balance Sheet
Total Assets4.15B3.79B3.59B3.49B3.37B
Cash, Cash Equivalents and Short-Term Investments4.30M5.40M3.10M2.20M2.60M
Total Debt3.47B3.21B2.89B2.56B1.91B
Total Liabilities3.69B3.43B3.06B2.73B2.05B
Stockholders Equity465.30M340.20M529.00M753.10M1.33B
Cash Flow
Free Cash Flow634.20M642.90M622.90M632.30M340.60M
Operating Cash Flow940.30M866.40M861.10M795.50M641.70M
Investing Cash Flow-306.10M-223.50M-238.20M-163.20M-301.00M
Financing Cash Flow-635.30M-640.60M-622.00M-632.70M-341.40M

Hess Midstream Partners Technical Analysis

Technical Analysis Sentiment
Positive
Last Price40.28
Price Trends
50DMA
38.55
Positive
100DMA
38.62
Positive
200DMA
37.47
Positive
Market Momentum
MACD
0.36
Negative
RSI
59.97
Neutral
STOCH
52.25
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HESM, the sentiment is Positive. The current price of 40.28 is above the 20-day moving average (MA) of 38.71, above the 50-day MA of 38.55, and above the 200-day MA of 37.47, indicating a bullish trend. The MACD of 0.36 indicates Negative momentum. The RSI at 59.97 is Neutral, neither overbought nor oversold. The STOCH value of 52.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HESM.

Hess Midstream Partners Peers Comparison

Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$15.50B12.1639.79%8.67%11.48%-5.67%
78
Outperform
$8.19B19.8719.71%5.27%5.03%7.15%
75
Outperform
$8.29B15.5249.74%6.86%8.77%15.22%
74
Outperform
$10.23B27.548.29%3.11%10.83%-10.47%
58
Neutral
$6.81B45.95-8.21%7.58%23.42%-61.22%
57
Neutral
HK$89.00B3.58-2.25%2.98%-4.44%-41.07%
50
Neutral
$481.71M5.86-28.13%-4.69%-418.50%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HESM
Hess Midstream Partners
40.28
5.70
16.48%
WES
Western Midstream Partners
40.76
2.99
7.92%
SMC
Summit Midstream
25.43
-11.25
-30.67%
AM
Antero Midstream
17.07
3.50
25.79%
KNTK
Kinetik
41.18
2.45
6.33%
DTM
DT Midstream
100.16
28.37
39.52%

Hess Midstream Partners Corporate Events

Executive/Board ChangesM&A Transactions
Hess Midstream Announces Leadership Changes Post-Merger
Neutral
Jul 18, 2025

On July 18, 2025, following the merger between Hess Corporation and Chevron Corporation, Hess Midstream announced significant changes to its Board of Directors and executive leadership. John B. Hess and other key executives resigned from the Board, with Chevron’s Andy Walz appointed as Chairman alongside new members Kristen Ghattas and Kristi McCarthy. Jonathan C. Stein was named CEO, succeeding John B. Hess, and Michael J. Chadwick was appointed CFO. These changes reflect Chevron’s increased influence, owning approximately 37.8% of Hess Midstream, and aim to enhance shareholder value and operational performance.

The most recent analyst rating on (HESM) stock is a Buy with a $42.00 price target. To see the full list of analyst forecasts on Hess Midstream Partners stock, see the HESM Stock Forecast page.

Executive/Board ChangesPrivate Placements and Financing
Hess Midstream Partners Announces Secondary Share Offering
Neutral
May 30, 2025

On May 28, 2025, Hess Midstream LP announced the pricing of a secondary public offering of 15,022,517 Class A shares at $37.25 per share, conducted by an affiliate of Global Infrastructure Partners. The offering, managed by J.P. Morgan and Citigroup, is expected to generate gross proceeds of $559.59 million for the selling shareholder, with the company itself not receiving any proceeds. The offering is anticipated to close on May 30, 2025, and includes customary conditions and indemnifications. Additionally, governance changes were announced with the resignation of three board members, who left without disagreements with the company.

The most recent analyst rating on (HESM) stock is a Hold with a $40.00 price target. To see the full list of analyst forecasts on Hess Midstream Partners stock, see the HESM Stock Forecast page.

Executive/Board ChangesPrivate Placements and Financing
Hess Midstream Announces Major Share Offering
Neutral
May 28, 2025

On May 28, 2025, Hess Midstream LP announced the commencement of a public offering of 15,022,517 Class A shares by GIP II Blue Holding, L.P., an affiliate of Global Infrastructure Partners. This offering will result in GIP no longer holding ownership interests in Hess Midstream or its affiliates, with Hess Investments North Dakota LLC gaining full control. The board will see the resignation of GIP’s designated directors, and Hess will continue to control the company’s management. The offering will not alter existing commercial agreements or the partnership agreement with Hess.

The most recent analyst rating on (HESM) stock is a Hold with a $40.00 price target. To see the full list of analyst forecasts on Hess Midstream Partners stock, see the HESM Stock Forecast page.

Stock Buyback
Hess Midstream Partners Announces $200 Million Repurchase Plan
Positive
May 7, 2025

On May 5, 2025, Hess Midstream LP announced a $200 million repurchase agreement, including $190 million of Class B units from its sponsors and $10 million of Class A shares from the public. The repurchase, approved by the board and conflicts committee, aims to enhance shareholder returns and maintain financial flexibility. The transaction is expected to close on May 9, 2025, with funding from the company’s existing revolving credit facility.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 18, 2025