Tulsa, Oklahoma-based ONEOK, Inc. (OKE) is a leading midstream energy company. Valued at a market cap of $46.6 billion, the company specializes in gathering, processing, fractionation, transportation, storage, and marine export of natural gas, natural gas liquids (NGLs), crude oil, and refined petroleum products.
This energy company has considerably underperformed the broader market over the past 52 weeks. Shares of OKE have declined 13.1% over this time frame, while the broader S&P 500 Index ($SPX) has gained 20.6%. Moreover, on a YTD basis, the stock is down 26.3%, compared to SPX’s 9.6% return.
Narrowing the focus, ONEOK has also lagged behind the First Trust Nasdaq Oil & Gas ETF’s (FTXN) 9.9% downtick over the past 52 weeks and 5% drop on a YTD basis.
ONEOK released its Q2 results on Aug. 4, and its shares plunged 5.2% in the following trading session. Due to the positive impact of the EnLink and Medallion acquisitions across the company’s system, its adjusted EBITDA improved 22% from the year-ago quarter, reaching $2 billion. Moreover, its net income per share of $1.34 grew marginally year-over-year, meeting the consensus estimates. However, a higher inventory of unfractionated natural gas liquids (NGLs) due to unplanned outages and lower realized NGL prices, net of hedging, might have weighed on investor sentiments.
For the current fiscal year, ending in December, analysts expect OKE’s EPS to grow 5.8% year over year to $5.47. The company’s earnings surprise history is mixed. It met or surpassed the consensus estimates in two of the last four quarters, while missing on two other occasions.
Among the 17 analysts covering the stock, the consensus rating is a "Moderate Buy” which is based on 11 “Strong Buy,” one "Moderate Buy," and five “Hold” ratings.
The configuration is less bullish than two months ago, with an overall “Strong Buy” rating.
On Aug. 8, JPMorgan Chase & Co. (JPM) analyst Jeremy Tonet maintained a "Buy" rating on OKE and set a price target of $93, implying a 25.6% potential upside from the current levels.
The mean price target of $100.59 represents a 35.8% premium from OKE’s current price levels, while the Street-high price target of $147 suggests an ambitious upside potential of 98.5%.
