With Its Business Derisked, Is It Okay To Invest In ONEOK?

ONEOK, Inc. (NYSE: OKE), a master limited partnership that operates in the natural gas industry in the United States, has succeeded in de-risking its business over the past few years which prompted analysts at BMO Capital Markets to upgrade the stock.

BMO's Danilo Juvane upgraded Oneok's stock from Market Perform to Outperform with a price target boosted from $53 to $59. In fact, the stock now offers investors one of the best exposures to G&P in the midstream space.

New Business Profile

Oneok's business profile today is different from what it was a few years ago, as 90 percent of 2017's expected EBITDA will come from fee-based and take-or-pay assets. This marks an improvement from 65 percent in 2014 and 2015.

In addition, recent concerns over declined crude oil prices and by extension declining volumes from the Bakken region amount to "overblown" headlines, Juvane continued. On the contrary, declining output from Bakken is unlikely to meaningfully impact the company's 9 to 11 percent compounded annual dividend growth rate through 2021 and the company will see a relatively stable production volume level of 1.7Bcf/d through 2020.

"We think concerns around potential impacts to OKE's Bakken volumes are overblown, and while we are cognizant that perceptions take time to change, we think the proof will be had in earnings results over the next few quarters," Juvane emphasized.

Related Links:

Benzinga's Top Upgrades, Downgrades For July 5, 2017

Improving Fundamentals, Bottom Line Stability Among The Reasons For ONEOK Upgrade

Latest Ratings for OKE

Jul 2017	Morgan Stanley	Downgrades	Overweight	Equal-Weight
Jul 2017	BMO Capital	Upgrades	Market Perform	Outperform
Jun 2017	Stifel Nicolaus	Initiates Coverage On		Hold

View More Analyst Ratings for OKE
View the Latest Analyst Ratings

See more from Benzinga

• Improving Fundamentals, Bottom Line Stability Among The Reasons For ONEOK Upgrade

• UBS Turns Bullish On Oneok Ahead Of .3 Billion Merger Completion

© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.