U.S. Markets closed

Mizuho On EnLink Midstream: Permian Is Promising, But There's Uncertainty In Oklahoma

Priya Nigam

While EnLink Midstream LLC (NYSE: ENLC) may continue delivering growth at its Permian segment, its Oklahoma segment needs to achieve several quarters of outlook stability before a re-rating of the stock takes place, according to Mizuho Securities.

The Analyst

Mizuho’s Gabriel Moreen initiated coverage of EnLink Midstream with a Neutral rating and a price target of $11.50.

The Thesis

EnLink Midstream has a strong positioning in Permian and is highly leveraged to production growth. The company may invest most of its capital in Permian post-2019, Moreen said.

He added, however, that there is further downside to the near-term consensus estimates, given the continued decline in Midcontinent rig counts through the second quarter.

Global Infrastructure Partners’ investment in EnLink Midstream underlines the private equity firm’s confidence in the company’s assets. Global Infrastructure Partners could act as a “potential backstop” for EnLink Midstream’s capital needs, the analyst said.

“Our Neutral rating stems in part from uncertainty in Oklahoma, but also from our view these issues are relatively well-understood by the market as reflected by ENLC's recent underperformance versus Midstream peer,” Moreen wrote in the note.

Price Action

Shares of EnLink Midstream declined about 1.7% to $9.90 at time of publishing on Thursday.

Latest Ratings for ENLC

Date Firm Action From To
Jul 2019 Initiates Coverage On Neutral
Jul 2019 Upgrades Hold Buy
Apr 2019 Downgrades Buy Hold

View More Analyst Ratings for ENLC
View the Latest Analyst Ratings

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.