Market Overview

Valuation Largely Reflects Kimbell Roylaty's Upside, Stifel Says In Downgrade


Kimbell Royalty Partners LP (NYSE: KRP) reported March 8 fourth quarter revenue growth 20 percent quarter-over-quarter, while production and adjusted EBITDA were up 6 percent and 20 percent, respectively.

The Analyst

Stifel analyst Timothy Howard downgraded Kimbell Royalty from Buy to Hold with a $19 price target.

The Thesis

Kimbell Royalty's management continues to be upbeat around third-party M&A, Howard said in a note. The company's focus is on value with a preference for out-of-favor basins, while being agnostic to crude oil or natural gas production, the analyst said.

The company expects to complete a transaction on the dropdown front in 2018, the analyst added. That said, the analyst said he isn't modeling any third-party acquisitions or dropdowns, viewing potential deals as upside to his model.

Howard noted the company initiated a hedging program to insulate a modest portion of cash flows. Hedges will be a marginal detractor over the next two years, although some protection should do good, the analyst said.

The analyst also said management indicated the strategy could evolve, should prices change dramatically.

"We continue to favor KRP's liquids dominated production stream, modest leverage and optionality around dropdowns," Stifel said. However, the firm believes the current valuation largely reflects any potential upside.

Howard also noted the Kimbell Royalty units have limited liquidity, with its estimated 30-day average trading value at about $350,000 per day.

The Price Action

Kimbell Royalty shares are down about 3 percent over the past year.

The stock traded around $18.45 at time of publication.

Related Links:

Best Sector ETFs For March: Banking On Oil

Think Again About ExxonMobile

Latest Ratings for KRP

Oct 2019MaintainsOutperform
Oct 2019Initiates Coverage OnOutperform
May 2019DowngradesBuyHold

View More Analyst Ratings for KRP
View the Latest Analyst Ratings

Posted-In: Stifel Timothy HowardAnalyst Color Downgrades Analyst Ratings


Related Articles (KRP)

View Comments and Join the Discussion!

Latest Ratings

IBMWells FargoMaintains140.0
PNCWells FargoMaintains147.0
TWOUDA DavidsonMaintains17.0
IDYAOppenheimerInitiates Coverage On17.0
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

Analyst Sees Buy Opportunity In Hasbro As 'Black Panther' Success Should Help Offset Toys 'R' Us Decline

Amid Rising Home Prices, Meet 'The Down Payment Movement'