Wells Fargo has revised its price target for Hess Midstream LP (HESM, Financial), lowering it from $42 to $41, while retaining an Equal Weight rating for the stocks. While the company's performance for the first quarter met expectations, the guidance for the second quarter was less optimistic. Despite this, Hess Midstream LP has maintained its projections for 2025. However, Wells Fargo expressed concerns about the substantial growth required in the latter half of the year amidst a challenging commodity market, which may pose risks to meeting the midpoint of their guidance.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 4 analysts, the average target price for Hess Midstream LP (HESM, Financial) is $44.00 with a high estimate of $48.00 and a low estimate of $41.00. The average target implies an upside of 18.38% from the current price of $37.17. More detailed estimate data can be found on the Hess Midstream LP (HESM) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, Hess Midstream LP's (HESM, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Hess Midstream LP (HESM, Financial) in one year is $17.40, suggesting a downside of 53.19% from the current price of $37.17. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Hess Midstream LP (HESM) Summary page.
HESM Key Business Developments
Release Date: April 30, 2025
- Net Income: $161 million for Q1 2025, down from $172 million in Q4 2024.
- Adjusted EBITDA: $292 million for Q1 2025, compared to $298 million in Q4 2024.
- Total Revenues: Decreased by approximately $13 million due to lower throughput volumes.
- Processing Revenues: Decreased by approximately $7 million.
- Gathering Revenues: Decreased by approximately $6 million.
- Gross Adjusted EBITDA Margin: Approximately 80% for Q1 2025.
- Capital Expenditures: Approximately $50 million for Q1 2025.
- Adjusted Free Cash Flow: Approximately $191 million for Q1 2025.
- Revolving Credit Facility Balance: $128 million at quarter end.
- Q2 2025 Guidance - Net Income: Expected to be $170 million to $180 million.
- Q2 2025 Guidance - Adjusted EBITDA: Expected to be $300 million to $310 million.
- Full Year 2025 Guidance - Net Income: Expected to be $715 million to $765 million.
- Full Year 2025 Guidance - Adjusted EBITDA: Expected to be $1,235 million to $1,285 million.
- Full Year 2025 Guidance - Capital Expenditures: Approximately $300 million.
- Full Year 2025 Guidance - Adjusted Free Cash Flow: Expected to be $735 million to $785 million.
- Distribution Growth: Targeted annual growth of at least 5% per Class A share through 2027.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hess Midstream LP (HESM, Financial) delivered strong operating and financial performance despite challenging weather conditions in the first quarter.
- The company reaffirmed its full-year 2025 financial and throughput guidance, indicating confidence in its operational stability.
- Hess Midstream LP (HESM) has a low leverage ratio of approximately 3.1 times adjusted EBITDA, which is one of the lowest among its peers.
- The company has returned $1.95 billion to shareholders since 2021 through accretive repurchases, demonstrating a strong commitment to shareholder returns.
- Hess Midstream LP (HESM) expects to generate greater than $1.25 billion of financial flexibility through 2027 for incremental shareholder returns, including potential multiple unit repurchases per year.
Negative Points
- Throughput volumes were down compared to the fourth quarter due to severe winter weather, impacting production from Hess.
- Net income for the first quarter of 2025 was $161 million, a decrease from $172 million in the fourth quarter of 2024.
- Adjusted EBITDA for the first quarter of 2025 was $292 million, down from $298 million in the fourth quarter of 2024.
- Total revenues, excluding pass-through revenues, decreased by approximately $13 million due to lower throughput volumes from severe winter weather.
- The company anticipates higher seasonal maintenance activity in the second quarter, which may offset some volume growth.
