Goldman Sachs Cuts Hess Midstream (HESM) to Sell as Risk-Reward Weakens

Hess Midstream LP (NYSE:HESM) is included among the 10 Best Dividend Stocks Yielding at Least 7% According to Hedge Funds.

On April 20, Goldman Sachs analyst John Mackay downgraded Hess Midstream LP (NYSE:HESM) to Sell from Neutral and set a $32 price target, implying 7% downside. He pointed to a more difficult risk/reward at current levels. In his view, Hess Midstream’s volume growth is likely to lag peers. This reflects a plateauing production outlook from Chevron in the basin, along with long-term re-contracting risk as legacy fee agreements remain well above market rates. He also noted a slower capital returns framework.

On April 1, Morgan Stanley analyst Robert Kad raised the firm’s price recommendation on Hess Midstream to $42 from $38. It reiterated an Equal Weight rating on the shares. In the firm’s weekly update on midstream and renewable energy infrastructure, he said the sector has drawn attention compared to higher torque energy subsectors since the start of the Iran war. He added that investors have “started to sharpen their pencils on potential midstream estimate revisions.”

Hess Midstream LP (NYSE:HESM) operates as a midstream company with a portfolio of assets across oil, gas, and produced water handling. Its operations are concentrated in the Bakken and Three Forks Shale plays within the Williston Basin in North Dakota, where it provides services to both the company and third-party customers.

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