Kinder Morgan Downgraded At Credit Suisse After 'Swing And A Miss'

• Kinder Morgan Inc KMI shares are down 12 percent since July 22, even after staging a slight recovery through October.
• Credit Suisse’s John Edwards downgraded the rating on the company from Outperform to Neutral, while reducing the price target from $52 to $39.
• The company reported another quarterly miss and reduced its dividend growth guidance, Edwards noted. 

Kinder Morgan has reduced its dividend growth projection for next year to 6-10 percent, on account of a decline in commodity prices and rise in the cost of capital. It has withdrawn its guidance of a 10 percent dividend growth CAGR through 2020.

Analyst John Edwards said that while 10 percent is possible in the long term, the $2 billion of excess that was projected with Project Fusion “is mostly gone.” Edwards has reduced the growth estimate by about 310 bps per year through 2020 to 6.9 percent.

In the report Credit Suisse noted, “We don’t think investors should be too surprised by the reduction. None-the-less, in the 13 years of following KMI, we don't recall management having to reduce guidance… ever.”

Kinder Morgan reported its earnings before DD&A at $1.839B, short of the Credit Suisse estimate of $1.927B, with misses in Nat Gas and Terminals, offset by a beat in CO2. The company has missed expectations every quarter this year and is likely to disappoint in the full-year results, Edwards mentioned.

The company does expect to meet its dividend target of $2 per share. The 2015 estimate for Segment EBDA has been reduced by about 2 percent to $7.55B and DCF by 2 percent to $4.63B. The EPS estimate has been raised by $0.02 to $0.78 to reflect elimination of equity issuance.