On Friday, ONE Gas Inc. (NYSE:OGS) shares, a $4.19 billion natural gas utility with a FAIR financial health rating according to InvestingPro, experienced a shift in its stock outlook as Ladenburg Thalmann adjusted its rating on the company.
The firm downgraded ONE Gas from Buy to Neutral, also revising the price target to $75.50 from a previously higher figure. The adjustment came in response to the company's 2025 guidance call, where ONE Gas presented an updated earnings base that will affect future growth projections.
The new rating reflects a change in expectations after the energy company revised its earnings base used for calculating projected growth. Previously, ONE Gas had based its earnings per share (EPS) growth on a midpoint of $4.14 from its 2023 guidance.
However, following the recent guidance call, the company has shifted this base to $3.90, which represents the lower midpoint of its 2024 guidance. Despite the revised outlook, InvestingPro data shows the company maintains an impressive 11-year streak of dividend increases, currently offering a 3.57% yield.
This update from ONE Gas led to a reassessment of the company's growth potential. Ladenburg Thalmann has subsequently lowered its EPS estimates for 2025 to 2027, aligning them with the company's revised earnings base and its anticipated 4%-6% EPS growth.
This conservative outlook has prompted the firm to adjust its stance on the stock to a Neutral position. Notably, five analysts have recently revised their earnings estimates upward for the upcoming period, suggesting mixed sentiment among Wall Street experts.
The downgrade and new price target come as ONE Gas adjusts its financial trajectory in light of the new base year figures. This development is significant for investors tracking the company's performance and future earnings potential. The new price target of $75.50 is set against the backdrop of these revised growth estimates and the company's latest financial guidance.
ONE Gas's stock will continue to be watched closely by investors as the company navigates its revised earnings strategy and works towards its growth targets for the coming years. The company's performance against these new projections will be a key factor in future evaluations and ratings by financial analysts.
In other recent news, ONE Gas Inc. has seen an array of developments. Mizuho (NYSE:MFG) Securities raised its target for ONE Gas to $77, maintaining a neutral stance, following the company's announcement of its 2025 and five-year financial guidance.
ONE Gas exceeded expectations with its earnings per share (EPS) midpoint of $4.26 for 2025, surpassing both Morgan Stanley (NYSE:MS)'s estimate and the consensus forecast. Analysts at InvestingPro have revised their earnings estimates upward, reflecting growing confidence in the company's outlook.
The company also projects robust growth, expecting to be at the high end of its projected 4-6% EPS growth rate through 2029, despite plans for a 6% reduction in capital expenditures. Meanwhile, Stifel increased ONE Gas's price target to $74, following the company's guidance that exceeded analysts' expectations. This increase is largely attributed to the company's confidence in achieving the upper end of its five-year EPS guidance range, set at 4-6%.
ONE Gas has also projected steady growth and significant capital investments through 2029, with a net income ranging between $254 million and $261 million by 2025. The company expects earnings per diluted share to be $4.20 to $4.32, a projection supported by five analysts who have recently revised their earnings estimates upward. For 2025, ONE Gas anticipates a capital expenditure of approximately $750 million, primarily for system integrity and replacement projects.
These recent developments reflect ONE Gas's ongoing operational execution and growth, as well as its adaptive approach to changing economic conditions.
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