Sultan Khalid
2 min read
It was recently reported that analysts at Citi have upgraded Kinetic Holdings Inc. (NYSE:KNTK). Let's shed some light on the development.
A technician making adjustments to a natural gas pipeline entering a processing facility.
Kinetic Holdings Inc. (NYSE:KNTK) is the premier midstream operator in the Delaware Basin, providing gathering, compression, processing, transportation, and water management services.
It was revealed this week that Citi analyst Spiro Dounis has upgraded Kinetic Holdings Inc. (NYSE:KNTK) from Neutral to Buy, while also adjusting the stock's price target from $58 to $55, following an over 20% decline in the company's share price which has created a more attractive risk-return proposition. The investment bank believes that Kinetic is 'uniquely positioned' to grow EBITDA 10% annually through 2029 without much assistance from volume growth in the prolific Permian Basin. The energy company's current EBITDA stands at $523.32 million, with impressive revenue growth of 20.36% over the last year.
The recent plunge in crude oil prices has led to a decline in capital spending and lower drilling activity, which the analyst anticipates will drive more than 10% free cash flow yield over the next four years for Kinetic Holdings. This excess FCF is likely to be utilized for share repurchases, exhausting the $500 million buyback program it recently announced by the end of FY2027, if not sooner.
Earlier this month, Kinetic Holdings Inc. (NYSE:KNTK) reported strong results for the first quarter of 2025, posting an adjusted EPS of $1.06 and beating estimates by $0.24. The company's revenue also surged by 37.26% YoY to $2.61 billion, topping expectations by over $416 million.
While we acknowledge the potential of KNTK to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than KNTK and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
