DTM - DT Midstream downgraded at Mizuho as valuation now appears fair

DT Midstream ( NYSE: DTM ) +2% in Monday's trading even after Mizuho downgraded shares to Neutral from Buy with a $62 price  target, viewing shares as fairly valued, as the company no longer trades at a sufficient valuation discount to larger, gas-levered peers such as Kinder Morgan and Williams.

Mizuho analysts said Wall Street finally seems to appreciate DT Midstream's ( DTM ) high quality, natural gas-levered base business and has even begun to assign a slight premium to the company's Haynesville presence, trading at a 9.6x FY 2024 estimated EBITDA, in line with Kinder Morgan and Williams.

The company boasts a high-quality base business, visible medium-term growth potential of ~7% compound annual growth through 2026, and a strong balance sheet, Mizuho said, but further outperformance is harder to argue for on a relative basis.

DTM ( DTM ) delivered a slight beat on Q3 adjusted EBITDA and raised its FY 2022 guidance to $810M-$825M from $770M-$810M previously on its Millennium acquisition and underlying growth; it also disclosed a final investment decision on a ~200M cf/day phase 3 expansion of LEAP, which would raise pipeline capacity to ~1.9B cf/day.

DT Midstream's ( DTM ) Q3 results show the "incredible potential of this underappreciated midstream company," Power Hedge writes in an analysis newly published on Seeking Alpha .

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