Kinetik Holdings: A Natural Gas Midstream Company With a 7% Yield and Attractive Valuation

Kinetik Holdings (NYSE:KNTK), a natural gas midstream company, cut its guidance by 5% but its stock remains attractive with a 7% yield. The company operates in the Permian region and is backed by Blackstone and ISQ Global. As a small cap corporation, Kinetik Holdings does not issue K-1 forms.

Kinetik Holdings (NYSE:KNTK), a natural gas midstream company operating in the Permian region, has adjusted its 2025 EBITDA guidance by 5% due to lower commodity gas and oil prices, as well as reduced transportation volumes. The company, backed by Blackstone and ISQ Global, reported a 3.8% year-over-year increase in EBITDA for the June quarter, with EBITDA of $243 million. Despite the guidance reduction, the stock remains attractive, offering a 7.6% yield [1].

The company's Kings Landing gas processing complex in New Mexico, which is currently undergoing testing, is expected to ramp up in late September. This facility, along with the ECCC Pipeline under construction, is anticipated to offset recent weakness in the company's earnings. Kinetik Holdings' growth projects, including the Kings Landing II facility, are also poised to capitalize on increased producer activity in the Permian region [1].

Institutional investors have shown increased interest in Kinetik Holdings, with Deutsche Bank AG significantly increasing its holdings by 45.3% in the first quarter. Other large investors, such as Comerica Bank, Sterling Capital Management LLC, and Nisa Investment Advisors LLC, have also boosted their stakes in the company. The consensus rating among analysts is a "Moderate Buy" with a target price of $55.56 [2].

Despite the recent guidance reduction, Kinetik Holdings continues to project a 3-5% dividend growth rate and targets 10% annual EBITDA growth for the next five years. The company's bullish case projects a stock price of $64 in 2027, assuming a KMI multiple of EBITDA at 11x. However, risks include high payout ratios, commodity price headwinds, technical overhangs from large private equity holders, and elevated leverage [1].

In conclusion, Kinetik Holdings' adjusted guidance reflects the current market conditions, but the stock's attractive yield and growth prospects make it an interesting opportunity for investors. The company's strategic positioning in the Permian region and its growth projects provide a strong foundation for future earnings growth.

References:
[1] https://seekingalpha.com/article/4814503-kinetik-cut-guidance-by-5-percent-stock-attractive-at-7-plus-percent-yield
[2] https://www.marketbeat.com/instant-alerts/filing-deutsche-bank-ag-acquires-126603-shares-of-kinetik-holdings-inc-nysekntk-2025-08-14/