Citi analyst Doug Irwin reiterated a Buy rating on Hess Midstream Partners (HESM – Research Report) today and set a price target of $44.00.
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Doug Irwin has given his Buy rating due to a combination of factors including an improved outlook for Hess Midstream Partners’ free cash flow (FCF) beyond 2027. Although the company has a capital expenditure (capex) guidance of approximately $300 million for 2025, which was higher than previous estimates, a significant reduction in capex is anticipated after new processing capacity becomes operational in 2027. The management’s confidence in FCF growth through the decade, driven by both EBITDA growth and declining capex, supports his positive outlook.
Furthermore, the expectation that FCF growth will surpass EBITDA growth in the medium term suggests a potential continuation or even an acceleration of the current capital allocation strategy. Irwin estimates substantial buybacks amounting to nearly $2.5 billion over the next five years, representing more than 25% of Hess Midstream Partners’ market capitalization, along with over 10% annual distributions. Consequently, he has increased the target price to $44, reflecting the enhanced cash flow projections and a valuation based on an NPV methodology, implying a ~9.0x multiple on the 2026 estimated EBITDA.
Irwin covers the Energy sector, focusing on stocks such as Delek Logistics, Hess Midstream Partners, and Kodiak Gas Services, Inc.. According to TipRanks, Irwin has an average return of 19.0% and an 87.50% success rate on recommended stocks.