Melius Initiates Buy Rating on Kinder Morgan Amid Strong Earnings
Kinder Morgan Inc. has been initiated with a buy rating by Melius, with a price target of $38.00. This implies upside from the current stock price of $31.72, although InvestingPro data suggests that the stock is trading above its Fair Value, making it an overvalued equity in the energy infrastructure sector.
Melius notes that Kinder Morgan benefits from structural demand tied to power generation for data center growth and liquefied natural gas feed gas exports. Over 60% of the company's $9.6 billion sanctioned backlog serves power and utility demand, providing a significant advantage.
The firm highlights that Kinder Morgan adds capacity through projects like Mississippi Crossing and Trident at a cost of roughly $0.8 billion to $0.9 billion per billion cubic feet per day, compared to close to $4 billion for a greenfield project like Mountain Valley Pipeline due to existing infrastructure on its system.
Kinder Morgan's growth program runs entirely off internal cash flow, with leverage at 3.6 times, the lowest since the 2014 consolidation. All three rating agencies have upgraded Kinder Morgan to BBB+ or equivalent, and the company has raised its dividend for eight consecutive years, offering a 3.75% yield.
In recent news, Kinder Morgan reported strong financial results for the second quarter of 2026, surpassing Wall Street's expectations with an adjusted earnings per share (EPS) of $0.37 and revenue of $4.48 billion. The company raised its full-year 2026 guidance, projecting adjusted EBITDA to be at least 5% above budget and adjusted EPS at least 11% above budget.