Market Overview

Improving Fundamentals, Bottom Line Stability Among The Reasons For ONEOK Upgrade

Share:

Analysts at Argus turned bullish on ONEOK, Inc. (NYSE: OKE), a master limited partnership that engages in the gathering, processing, storage and transportation of natural gas in the U.S., despite a 17 percent decline since the start of 2017.

Argus' David Coleman upgraded Oneok's stock from Hold to Buy with a $55 price target amid improving market fundamentals, greater earnings stability, and an attractive 5.2 percent dividend yield which can be sustained through its cash flow.

Throughout 2016, Oneok benefited from positive volume and contract trends but this hasn't continued in 2017, Coleman noted. But the company took the prudent and necessary steps in restructuring many of its contracts from percent-of-proceeds to fee-based which better insulates the company against changing volumes and energy prices.

Fee-based contracts are more favorable for Oneok during periods of low energy prices as Oneok's customers pays the MLP whether it uses the pipelines or not, the analyst added. In addition, 90 percent of the company's earnings are expected to be fee-based throughout 2017 and the natural gas liquids segment is expected to become a key driver of fee-based growth.

Finally, Oneok ended the first quarter with $310.8 million in cash and cash equivalents, up from $137 million in the same quarter a year ago. This helps supports management's pledge to increase its annualized dividend to $2.98 after the acquisition of the remaining stake in ONEOK Partners closes and then another 9 percent to 11 percent annually through 2021.

Related Links:

20 Stocks Moving In Wednesday's Pre-Market Session

UBS Turns Bullish On Oneok Ahead Of $9.3 Billion Merger Completion

Latest Ratings for OKE

DateFirmActionFromTo
Nov 2019Initiates Coverage OnBuy
Nov 2019MaintainsBuy
Nov 2019UpgradesNeutralBuy

View More Analyst Ratings for OKE
View the Latest Analyst Ratings

Posted-In: Argus David Coleman energy energy prices MLPAnalyst Color Upgrades Analyst Ratings

 

Related Articles (OKE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
TOLGoldman SachsInitiates Coverage On42.0
KBHGoldman SachsInitiates Coverage On36.0
YEXTSunTrust Robinson HumphreyMaintains28.0
LHCGSunTrust Robinson HumphreyMaintains160.0
DLRSunTrust Robinson HumphreyMaintains140.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Red Hat (RHT) Beats Q1 Earnings, Shares up on Positive View

Eaton Vance's Ratings Affirmed by Moody's, Outlook Stable