On Wednesday, Goldman Sachs (NYSE:GS) updated its financial outlook for Williams Companies (NYSE:WMB), increasing the share price target to $37 from the previous $36 while maintaining a neutral stance on the stock.
The firm anticipates Williams Companies to report a stronger than expected first-quarter performance, driven by robust marketing operations and despite potential declines in gathering services.
Goldman Sachs projects an EBITDA of $1,817 million for Williams Companies in the first quarter, which surpasses the consensus estimate of $1,770 million by 3% and is slightly higher than their prior estimate of $1,807 million.
This positive adjustment is attributed to the expected solid performance of the company's marketing segment, Sequent, and the assumption that any declines in gathering services, especially from a key customer, will likely affect the second quarter and beyond, rather than the first quarter.
The firm's analysis suggests that the current soft gas market conditions may result in a full-year EBITDA that is approximately 1% below the consensus and midpoint guidance for 2024. However, Goldman Sachs believes that the market is more focused on the anticipated increase in natural gas demand beyond 2024, which is expected to overshadow any mixed commentary regarding the 2024 guidance.
Investors have high expectations for the company's future, particularly regarding demand growth driven by power generation and data centers. Year-to-date, Williams Companies' stock performance has been notable, showing a 13% increase compared to the 8% increase in the broader AMNA index.
While Goldman Sachs expects management to maintain a positive outlook, they also caution that regulatory timelines for infrastructure development could slightly temper enthusiasm, even if significant demand growth materializes.
InvestingPro Insights
As Goldman Sachs revises its outlook on Williams Companies (NYSE:WMB), real-time data from InvestingPro provides additional context for investors considering this stock. With a market capitalization of $47.81 billion and a P/E ratio of 14.93, WMB is trading at a valuation that is attractive relative to its near-term earnings growth, as indicated by a low PEG ratio of 0.26. The company's solid dividend track record is also noteworthy, having increased its dividend for 6 consecutive years and maintained payments for 51 consecutive years, offering a dividend yield of 4.88%.
InvestingPro Tips highlight that while WMB's stock is currently trading near its 52-week high, with the price at 97.96% of this peak, the RSI suggests the stock is in overbought territory. This could be a signal for investors to watch for potential pullbacks. Additionally, Williams Companies' low price volatility may appeal to those seeking stability in their investments. For more detailed analysis and additional InvestingPro Tips, investors can visit https://www.investing.com/pro/WMB. Currently, there are 9 more tips available to help you make informed decisions, and don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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