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Western Midstream Partners (NYSE:WES) wobbles between small gains and losses in Wednesday’s trading, as Wolfe Research downgraded the stock to Underperform from Peer Perform with a $25 price target, cautious ahead of Q2 results that likely will disappoint again.
Wolfe’s Keith Stanley said he sees Western Midstream (WES) tracking to the low end of full-year EBITDA guidance on weaker natural gas liquids prices, downside risk to volume growth, and higher costs, which follows recent challenges with FY 2022 EBITDA coming in at the low end of guidance range as well as a soft Q1.
Western Midstream (WES) has been “a leading capital return story with a solid base distribution, a newly implemented enhanced distribution which was first paid out in Q2 for the 2022 period, and robust buybacks nearing a whopping $500M last year,” but Stanley thinks this will change as the company invests in two new plants and “seeks to meet declining annual debt/EBITDA targets at a time EBITDA growth hasn’t materialized.”
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