Chevron's Acquisition of Hess Sparks Uncertainty for Hess Midstream Strategy

Morgan Stanley has resumed coverage of Hess Midstream LP (HESM) with an Equal Weight rating and a $48 price target, citing the retention of Hess Midstream's consistent cash flow profile under Chevron's (CVX) sponsorship. However, the future strategy of Hess Midstream remains uncertain under new sponsorship. The average target price for Chevron Corp (CVX) is $165.72, implying an upside of 6.35% from the current price of $155.83.

Morgan Stanley has resumed coverage of Hess Midstream Partners LP (HESM) with an Equal Weight rating and a $48 price target, citing the retention of Hess Midstream's consistent cash flow profile under Chevron's (CVX) sponsorship. However, the future strategy of Hess Midstream remains uncertain under new sponsorship. The average target price for Chevron Corp (CVX) is $165.72, implying an upside of 6.35% from the current price of $155.83.

The coverage resumption follows the completion of Hess Midstream sponsor Hess Corporation's merger with Chevron, which now serves as the general partner and majority shareholder with a 37.8% equity interest through 79.4 million Class A shares. Morgan Stanley notes that the primary question facing Hess Midstream is whether Chevron will maintain it as an independent midstream entity or acquire the remaining stake. The firm suggests that while a potential buyout wouldn’t significantly impact Chevron financially, such a move could give the energy giant more direct control of midstream operations, enable better upstream integration, reduce operating costs, and simplify the corporate structure.

In recent news, Hess Midstream has undergone significant developments following the completion of Chevron’s acquisition of Hess Corporation’s entire interest in the company. This acquisition prompted S&P Global Ratings to upgrade Hess Midstream’s credit rating to 'BBB-', citing a stable outlook due to expected financial stability through 2025. Additionally, Hess Midstream announced changes in its executive leadership and Board of Directors as part of the transition, with Chevron now owning approximately 37.8% of Hess Midstream. In financial forecasts, Citi and UBS both reiterated their Buy ratings for Hess Midstream stock, with price targets of $42 and $45, respectively. Citi projects a second-quarter 2025 adjusted EBITDA of $306 million, while UBS estimates a slightly higher figure of $308 million. Furthermore, Hess Midstream has announced a public offering of 15,022,517 Class A shares, managed by J.P. Morgan and Citigroup (NYSE:C). The company clarified that it will not receive proceeds from this share sale, as it is represented by an affiliate of Global Infrastructure Partners, a segment of BlackRock (NYSE:BLK). These developments mark a period of transition and strategic positioning for Hess Midstream.

References:
[1] https://www.investing.com/news/analyst-ratings/morgan-stanley-resumes-coverage-of-hess-midstream-stock-with-equalweight-rating-93CH-4152438
[2] https://www.tradingview.com/news/reuters.com,2025-07-25:newsml_RSY6876Sa:0-reg-mony-group-plc-transaction-in-own-shares/
[3] https://www.hartenergy.com/exclusives/chevrons-next-move-develop-or-divest-bakken-after-hess-deal-213632
[4] https://seekingalpha.com/news/4472453-hess-midstream-upgraded-at-wells-fargo-ahead-of-likely-eventual-acquisition-by-chevron