Argus: Kinder Morgan Has 25% Upside Potential

Energy infrastructure company Kinder Morgan Inc (NYSE: KMI) shares had a lean run for much of 2017, and the stock is down over 15 percent over the past year.

The Analyst

Argus analyst Bill Selesky upgraded shares of Kinder Morgan from Hold to Buy with a $23 price target.

The Thesis

Kinder Morgan's operational performance has been strong, while its valuation remains attractive, both on a historical basis and relative to peers, Selesky said in a Monday note. The analyst said he's impressed with the company's plan to hike its dividend substantially from 80 cents in 2018 to $1 in 2019.

The planned dividend hike reflects management's confidence in the company's strategy, Selesky said. 

Argus increased its 2018 earnings per share estimate for the company from 70 cents per share from 74 cents per share. The firm attributed the upward revision to expectations for higher pricing in all operating segments, overall margin improvement and lower interest expense following recent debt restructuring.

Argus' $23 price target and expected dividend increase imply a potential return of 25 percent from current levels.

The Price Action

Shares of Kinder Morgan were down slightly at $18.74 after the open Monday. 

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