On Thursday, JPMorgan (NYSE:JPM) updated its stance on Williams Companies (NYSE:WMB), increasing the price target to $47.00 from $42.00 while maintaining an Overweight rating. The firm forecasts a $1,627 million adjusted EBITDA for the second quarter of 2024, which is below the Street median of $1,670 million. The revised price target and expectations are based on a comprehensive analysis incorporating recent commodity prices and company performance insights from JPMorgan's Energy Conference.
Williams Companies' Northeast G&P segment is anticipated to experience a decline in gathering volumes due to sustained producer pullback, leading to a forecasted $479 million adjusted EBITDA. The Transco rate case test year and seasonality factors in the TGoM segment are expected to contribute to a sequential decrease of $28 million, with a segment contribution estimate of $811 million. In the West, significant production curtailments in the Haynesville are predicted to drive lower volumes, alongside maintenance at the Echo Springs plant affecting Wamsutter volumes, potentially leading to a $20 million headwind.
The Gas & NGL Marketing segment is projected to perform lower due to seasonal weakness and the financial treatment of storage contracts, with an estimated $10 million decrease from the second quarter of 2023's reported negative $16 million. Additionally, the Other segment EBITDA is modeled at $46 million, influenced by lower E&P volumes and planned asset maintenance.
Capital expenditures are expected to be deployed fairly evenly throughout the year, with a growth capital budget between $1.45 billion and $1.75 billion, slightly more in the latter half of the year, and a heavier maintenance spend anticipated in the second and third quarters, within a guidance range of $1.1 billion to $1.3 billion. The new December 2025 price target of $47 reflects these various factors influencing the company's performance.
In other recent news, Williams Companies has been the subject of several positive analyst reviews following robust earnings results. Argus upgraded the company's stock from a Hold to a Buy rating, citing improved earnings and outlook. This upgrade followed Williams Companies' reported adjusted net income from continuing operations of $719 million, or $0.59 per diluted share, for the first quarter of 2024, a notable increase from the same period last year.
Truist Securities increased its price target for Williams Companies shares to $42, while maintaining a Hold rating. The firm recognized the company's diversified earnings and the progress of current and potential future projects. Similarly, RBC (TSX:RY) Capital maintained an Outperform rating on Williams Companies' stock and raised its price target to $44, citing the company's successful execution of growth projects.
Wells Fargo (NYSE:WFC) upgraded Williams Companies' stock from Equal Weight to Overweight, increasing the price target to $46. The firm highlighted the company's complete exposure to natural gas as a key advantage. Additionally, the firm adjusted its price target for Williams Companies to $38, maintaining an Equal Weight rating due to expected robust profits at Sequent, a subsidiary of Williams Companies.
InvestingPro Insights
Following JPMorgan's updated outlook on Williams Companies, real-time data from InvestingPro provides additional context to the company's current financial standing. With a market capitalization of $51.42 billion, Williams Companies trades at a P/E ratio of 17.74, which suggests investors are willing to pay a premium for its earnings relative to the company's near-term growth, as indicated by the adjusted P/E ratio of 20.58 for the last twelve months as of Q1 2024. Additionally, the company's revenue in the same period was reported at $10.16 billion, despite a revenue contraction of 9.39% from the previous year. However, it's important to note that the quarterly revenue growth for Q1 2024 was positive at 7.96%.
InvestingPro Tips highlight that Williams Companies has a track record of raising its dividend for 6 consecutive years, with a notable dividend growth of 6.15% in the last twelve months as of Q1 2024. Moreover, the stock generally exhibits low price volatility, which could appeal to investors looking for stable investment options. For those interested in deeper analysis and additional tips, InvestingPro offers more insights, including 10 additional InvestingPro Tips for Williams Companies. Unlock these tips and enhance your investment strategy with InvestingPro, and don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.