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Hess Midstream Adjusts Guidance Amidst Reduced Bakken Activity Hess Midstream LP (HESM) has issued updated financial and operational guidance for the remainder of 2025 and for the years 2026 and 2027. The revision is primarily driven by an expected decrease in drilling activity by Chevron Corp (CVX) in the Bakken Region, leading to a notable decline in HESM's share price. The Event in Detail: Chevron's Operational Shift and Hess Midstream's Forecast Chevron Corp is set to reduce its rig count in the Bakken from four to three drilling rigs, commencing in the fourth quarter of 2025. This strategic decision by a key partner has directly influenced Hess Midstream's forward-looking projections. As a result, Hess Midstream anticipates that oil throughput volumes will plateau in 2026, although gas throughput volumes are still forecast to expand through at least 2027. The company now projects Adjusted EBITDA for 2026 to be relatively flat compared to 2025, with growth expected to resume in 2027. This anticipated growth is underpinned by continued increases in gas throughput volumes and the inflation escalation provisions embedded within Hess Midstream's existing commercial agreements. Capital spending is also set for a significant reduction in 2026 and 2027, as the Capa gas plant project has been removed from its forward plan, and early engineering activities have been suspended. For the full year 2025, Hess Midstream has updated its gas throughput guidance, with gas gathering volumes now expected to average between 455 to 465 million cubic feet (MMcf) of natural gas per day, and gas processing volumes projected between 440 to 450 MMcf per day. These adjustments are partly attributed to adverse weather conditions, third-quarter maintenance, and lower anticipated third-party volumes in the fourth quarter. Both third-quarter and full-year 2025 net income and Adjusted EBITDA are now expected to be at the lower end or within the lower half of previously announced guidance ranges. Following the announcement, Hess Midstream shares experienced a decline of approximately 6.3% on the day, with the stock down nearly 8% at the time of initial publication, reflecting immediate investor concerns. Analysis of Market Reaction: Navigating Partner-Dependent Growth The market's immediate reaction to the revised guidance for Hess Midstream underscores the sensitivity of midstream operators to the activity levels of their upstream partners. The reduction in Chevron's drilling rigs in the Bakken directly impacts the volume of crude oil and natural gas flowing through Hess Midstream's infrastructure, thereby affecting its fee-based revenue streams. While the company maintains that throughput volumes will generally remain above already-established minimum volume commitments (MVCs), the plateauing of oil throughput in 2026 and the projected flat Adjusted EBITDA for the same year signal a deceleration in growth that investors had not initially factored in. The cancellation of the Capa gas plant, while leading to lower capital expenditures and enhancing free cash flow, also indicates a more conservative growth posture. This cautious approach, while fiscally prudent, tempers the growth expectations that often drive valuation in the Oil & Gas Midstream Sector. The market is actively repricing Hess Midstream's near-term growth trajectory in light of these operational shifts. Broader Context and Implications: Midstream Resilience in a Evolving Landscape Hess Midstream's situation plays out against a backdrop of a broader midstream energy sector that has increasingly prioritized capital discipline and enhanced shareholder returns. The sector has seen a significant reduction in capital spending—by a third compared to prior peak levels—leading to improved financial metrics. Returns on incremental Return on Invested Capital (ROIC) have increased from 10% to an estimated 15-20%, enabling comparable cash flow growth with reduced expenditure. The sector has largely transitioned from being free cash flow negative to positive, with balance sheet leverage remaining historically low. This strategic shift has been well-received by the market, with the Alerian MLP Total Return Index and Alerian Midstream Total Return Index reporting strong performance in 2024, increasing +24.4% and +44.5% respectively, significantly outperforming the S&P 500 Energy Sector Total Return of +5.7%. While Hess Midstream's commitment to financial strength, a long-term leverage target of 3x Adjusted EBITDA, and targeted annual distribution growth of at least 5% through 2027 aligns with this industry trend, the Chevron decision highlights the inherent vulnerability of even fee-based models to the specific investment strategies of major exploration and production partners. HESM currently offers a substantial 7.5% dividend yield, trades at a Price-to-Earnings (P/E) ratio of 14.7, and holds a market capitalization of $8.3 billion, with a beta of 0.63, indicating lower volatility relative to the broader market. Expert Commentary: Revisions and Catalysts Market analysts have adjusted their outlooks following Hess Midstream's guidance update. > Wells Fargo analyst Praneeth Satish downgraded Hess Midstream from Overweight to Equal Weight, lowering the price target from $48.00 to $39.00. Satish noted, "their prior positive thesis was driven by growth under a 4-rig program with strong capital return and a potential buyout, but under a 3-rig setup, the buyout is now the main catalyst." > UBS analyst Manav Gupta maintained a Neutral rating with a $43.00 price target on Hess Midstream. Gupta cited concerns over potential reduced drilling activity in the Bakken due to low commodity prices but also acknowledged that "throughput volumes are expected to remain above established minimum volume commitments." Hess Midstream CEO Jonathan Stein emphasized the company's ongoing strategic focus: > "Hess Midstream's strategy continues to focus on delivering differentiated cash flow stability and balance sheet strength that supports consistent and ongoing return of capital to shareholders." Looking Ahead: Operational Resilience and Future Catalysts Hess Midstream is expected to provide further updated operational and financial guidance, including 2028 minimum volume commitments, following the receipt of an updated development plan from Chevron and its own 2026 budget approval in December. The company's ability to leverage its continued growth in gas throughput volumes and benefit from inflation escalation provisions in its commercial agreements will be crucial for resuming Adjusted EBITDA growth in 2027. Key factors for investors to monitor include Hess Midstream's continued execution on its commitment to return capital to shareholders, including the targeted 5% annual distribution growth and potential share repurchases. The long-term stability of gas volumes, coupled with disciplined capital allocation, will be vital for mitigating the impact of plateauing oil throughput. Additionally, the broader market will be watching for any further shifts in major upstream players' investment strategies within key basins such as the Bakken, as these decisions will continue to shape the trajectory of midstream operators like Hess Midstream. The potential for a strategic buyout, as alluded to by analysts, also remains a speculative yet significant catalyst for the stock.
Analyst Calls Reflect Divergent Views in Technology and Logistics Sectors Wall Street has delivered a series of notable rating adjustments across key technology and logistics firms, underscoring a market grappling with the transformative potential of artificial intelligence and the headwinds of a challenging macroeconomic environment. These revisions highlight a nuanced landscape where innovation and strategic restructuring are rewarded, while persistent demand weakness and valuation concerns lead to caution. Tesla's AI Leadership Fuels Optimism Despite Volume Concerns Tesla (TSLA) received a significant upgrade from Baird, moving its rating from Neutral to Outperform and raising its price target substantially to $548.00 from $320.00. This bullish outlook comes despite the electric vehicle manufacturer missing analyst estimates for three consecutive quarters and Baird's own projection that Tesla's sales volumes are "likely to decline again in full-year 2025," with "near-term fundamentals expected to be choppy." Baird's revised stance is primarily predicated on Tesla's perceived position as "the leader in physical AI." This assessment points to the company's strategic advancements in robotics and autonomous systems, particularly its third-generation Optimus humanoid robot, which Elon Musk projects will account for 80% of Tesla's future value. The integration of Dojo supercomputing and vision-based neural networks across its EV and robotics platforms is seen as a unifying ecosystem that reduces development costs and accelerates innovation. While the company's net income fell by 52.46% in 2024 to $7.13 billion amidst surging capital expenditures—including $15 billion in 2024 for AI and robotics infrastructure—its robust operational cash flow, which saw a 223% year-over-year increase in Q3 2024 to $2.7 billion, provides liquidity for scaling Optimus production. Tesla currently trades at a Price-to-Earnings (P/E) ratio of 230, significantly above industry averages, reflecting high investor expectations for its long-term AI-driven growth trajectory. Intel Experiences Conflicting Analyst Perspectives Amid Nvidia Collaboration Intel (INTC) experienced a notable divergence in analyst sentiment following its announced collaboration and investment from Nvidia (NVDA). Citi downgraded Intel from Neutral to Sell, raising its price target slightly to $29 from $24. Citi analyst Christopher Danely expressed skepticism, stating, "We expect minimal improvement for Intel as better graphics won't make Intel's CPU better than AMD's," and questioned the probability of success for Intel's leading-edge foundry business, which they believe is "years behind Taiwan Semiconductor (TSM)." Conversely, Benchmark upgraded Intel to Buy from Hold, setting a price target of $43. This upgrade directly cites Nvidia's $5 billion investment in Intel stock, agreeing to purchase shares at $23.28 apiece, as a "significant fundamental tipping point" for Intel's long-term competitive positioning. The partnership, which includes co-development of data center and PC technologies for AI applications, is viewed by Benchmark as a "strong vote of confidence" in Intel's x86 roadmap and its ability to compete in the high-performance and AI-focused semiconductor market. The announcement triggered a 23% surge in Intel's stock, marking its best day in 38 years, although some gains were later pared. Retail investor sentiment also shifted dramatically, with Stocktwits reporting an "extremely bullish" outlook. Financially, Intel faces significant challenges, reflected in a 3-year Revenue Growth of -13.7%, an Operating Margin of -8.29%, and a Net Margin of -38.64%. Despite these figures, the company's QTR revenue of $12.86 billion exceeded consensus estimates, and the Nvidia alliance could strengthen its server position and attract new foundry customers, potentially addressing an annual market opportunity of up to $50 billion. UPS Downgraded as Demand Recovery Remains Elusive United Parcel Service (UPS) saw its rating cut by BMO Capital from Outperform to Market Perform, with a reduced price target of $96.00 from $125.00. The downgrade stems from an "elusive" recovery in demand, particularly within the crucial business-to-business (B2B) segment, and broader macroeconomic challenges. The termination of de minimis exemptions in U.S. trade policies is also expected to negatively impact cross-border shipments. UPS shares have declined by 25% over the past six months, trading near their 52-week low and down 32% year-to-date. The company missed Q2 adjusted earnings per share estimates and subsequently withdrew its 2025 guidance, citing market uncertainty. While UPS is actively pursuing cost-cutting measures, including a reduction of approximately 20,000 positions and the closure of 73 facilities to achieve $3.5 billion in total savings, these initiatives are materializing "more gradually" than anticipated. Despite these headwinds, UPS maintains a robust 7.71% dividend yield, having consistently raised its dividend for 15 consecutive years. In contrast, rival FedEx (FDX) reported better-than-expected fiscal first-quarter earnings, projecting 4% to 6% revenue growth for the full year. Fiverr Upgraded on Strategic Restructuring and AI-First Pivot Fiverr International Ltd. (FVRR) received an upgrade from BTIG, moving its rating from Neutral to Buy, with a price target set at $31.00. This upgrade follows Fiverr's announcement of a significant restructuring, including a 30% workforce reduction, expected to generate approximately $30 million in cost savings. The company plans to reinvest about half of these savings to fuel growth, affirming its Q3 and full-year 2025 guidance. BTIG analyst Marvin Fong highlighted that this restructuring is part of Fiverr's strategic pivot to become an "AI-first company," accelerating its adjusted EBITDA margin target to 25% by 2026, a year earlier than previously projected. The move is not a response to business weakness, but rather a strategic realignment. From a valuation perspective, Fiverr trades at a substantial 55% discount to its peer Upwork (UPWK) on an FY26E EV/EBITDA basis, suggesting potential for multiple expansion. The anticipated Federal Reserve interest rate cut is also viewed as a potential tailwind, benefiting Fiverr's core small and medium-sized business (SMB) clients. Broader Implications and Market Outlook The diverse analyst calls underscore a market deeply influenced by technological shifts and macroeconomic pressures. Tesla's upgrade signals increasing investor confidence in the long-term disruptive potential of AI and robotics, positioning the company beyond its core EV manufacturing. The conflicting views on Intel reflect the complexities of its turnaround strategy; while the Nvidia partnership provides a crucial endorsement and potential market expansion, significant challenges remain in its foundry business against established leaders like TSMC. This collaboration also intensifies competitive dynamics, posing a dual threat to AMD's market gains in both x86 and GPU segments. In the logistics sector, UPS's downgrade indicates that while companies are actively pursuing efficiency gains through cost-cutting, a broad recovery in demand remains elusive, impacting profitability and growth trajectories. The success of Fiverr's restructuring, coupled with its AI-first strategy, positions it as a potential beneficiary of a more streamlined operational model and favorable broader economic conditions for SMBs. Looking ahead, investors will closely monitor Tesla's upcoming earnings report on October 15, as well as the progress of Intel's Nvidia collaboration and its foundry advancements. The pace of macroeconomic recovery and its impact on shipping volumes will be critical for UPS, while Fiverr's execution of its AI-first strategy and its ability to realize cost savings will be key determinants of its future performance. These developments collectively point to a dynamic market where strategic innovation and efficient execution are paramount for navigating evolving investor expectations and competitive landscapes.
The P/E ratio of Hess Midstream LP is 37.1119
Mr. John Hess is the Chairman of the Board of Directors of Hess Midstream LP, joining the firm since 2019.
The current price of HESM is $35.46, it has increased 0.29% in the last trading day.
Hess Midstream LP belongs to Energy industry and the sector is Energy
Hess Midstream LP's current market cap is $7.4B
According to wall street analysts, 8 analysts have made analyst ratings for Hess Midstream LP, including 3 strong buy, 6 buy, 3 hold, 0 sell, and 3 strong sell