Should I sell Kinder Morgan shares after Goldman Sachs lowered its price target?
- Goldman Sachs lowered its price target to $15 on Kinder Morgan
- Kinder Morgan maintains a strong balance sheet
- The company's business has proven improvements throughout the first quarter of 2021
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Kinder Morgan, Inc. (NYSE: KMI) shares have advanced more than 35% since the beginning of the 2021 year, and the current share price stands around $18.67. Stock markets are at record highs, the global business activity is recovering, and OPEC expects a stronger oil demand recovery in the upcoming quarters.
Fundamental analysis: Goldman Sachs lowered its price target to $15 on Kinder Morgan
Kinder Morgan shares are advancing last several months, but Goldman Sachs assigned a sell recommendation recently. Goldman Sachs reported that Kinder Morgan has outpaced a reasonable valuation level and lowered its price target to $15 on KMI.
Research company Stifel also downgraded Kinder Morgan stock to hold from buy with an $18 price target; still, Stifel analyst Selman Akyol said that Kinder Morgan is well-positioned to participate in an anticipated economic recovery.
The company’s business has proven improvements throughout the first quarter of 2021, and the company reported better than expected results. Total revenue has increased by 67.5% Y/Y to $5.21 billion, while the GAAP EPS was $0.62 for the first fiscal quarter (beats by $0.39).
“Apart from the storm and throughout the quarter, our assets continued to provide strong cash flow as we remain guided by a sound corporate philosophy: fund our capital needs internally, maintain a healthy balance sheet, and return excess cash to our shareholders through dividend increases and/or share repurchases,” said KMI Executive Chairman Richard D. Kinder.
Kinder Morgan raised its outlook for the fiscal 2021 year and announced that it expects adjusted EBITDA in the range from $7.6 billion to $7.7 billion. The board of directors declared a $0.27/quarterly share dividend in April, representing a 2.9% increase from the prior dividend of $0.26.
Kinder Morgan’s 5.8% dividend looks safe, and the company’s management remains very optimistic about the upcoming quarters in terms of growth which is certainly positive for shareholders. Kinder Morgan maintains a strong balance sheet, and the company plans to increase investments in expansion projects.
Kinder Morgan trades at less than seven times TTM EBITDA, and with a market capitalization of $42.28 billion, shares of this company are fairly valued.
Technical analysis: Kinder Morgan shares remain in a bull market
According to technical analysis, there is no risk of a positive trend reversal for now despite the fact that Goldman Sachs lowered its price target to $15. Rising above $19 supports the continuation of the bullish trend, and the next price target could be located around $19.50.
On the other side, if the price falls below $17, it would be a strong “sell” signal, and we have the open way to $16 or even $15.
Kinder Morgan shares continue to trade in a bull market, and the company should improve its position even more as the economy reopening continues. Goldman Sachs lowered its price target to $15 on Kinder Morgan, but with a market capitalization of $42.28 billion, shares of this company are fairly valued.