Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Kinder Morgan’s TransMountain Sale Triggers Bernstein Upgrade

Courtesy of Benzinga.

Kinder Morgan's TransMountain Sale Triggers Bernstein Upgrade

Kinder Morgan Inc (NYSE: KMI) announced the sale in May of its TransMountain Pipeline system and expansion project to the Canadian government for the U.S. dollar equivalent of $3.38 billion.

The Analyst

Bernstein analyst Jean Ann Salisbury upgraded shares of Kinder Morgan from Market-Perform to Outperform and increased the price target from $21 to $22, suggesting 28-percent upside.

The Thesis

The TransMountain sale brings Kinder Morgan from a 5.1 times multiple to 4.7 times and removes uncertainty for the company, Ann Salisbury said in a Tuesday note. (See the analyst’s track record here.)

The upgrade is based on the following expectations, the analyst said: 

  • The sale of the TransMountain expansion project, which has occurred, and an improved debt overhang.
  • The sale of the enhanced energy recovery business for a 5 times multiple, thereby reducing leverage and removing the “most volatile business line.” 
  • The sale of any other non-core, non-take-or-pay assets.
  • Refraining from M&A to fuel growth.

Kinder Morgan’s declaration of itself as a safe, defensive, 80-percent take-or-pay equivalent, 4.5 multiple midstream company. 

Over the next year, Bernstein expects deleveraging from the TMX sale, the potential payment of a competitive dividen and investor demand for a diversified, non-Permian-focused play to act as multiple drivers for Kinder Morgan. 

The Price Action

Kinder Morgan shares were rallying 2.48 percent to $17.60 at the time of publication Tuesday afternoon. 

Related Links:

Argus: Kinder Morgan Has 25% Upside Potential

Jim Cramer Shares His Thoughts On BlackBerry, Kinder Morgan And More

Photo courtesy of Kinder Morgan. 

Latest Ratings for KMI

Date Firm Action From To
Jun 2018 Bernstein Upgrades Market Perform Outperform
Jun 2018 Wells Fargo Upgrades Market Perform Outperform
May 2018 Morgan Stanley Maintains Overweight Overweight

View More Analyst Ratings for KMI


View the Latest Analyst Ratings

Posted-In: Bernstein Jean Ann SalisburyAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!