Mizuho Praises Kodiak Gas Services’ (KGS) Capital Plan and Strategy Amid Tight Permian Gas Supply

Kodiak Gas Services Inc. (NYSE:KGS) is one of the best young stocks to buy and hold for 3 years. Earlier on December 3, Mizuho lowered the firm’s price target on Kodiak Gas Services to $44 from $47 and maintained an Outperform rating on the shares. The firm believes that the company’s capital plan aligns with its strategy to expand contracted margins amid tight natural gas supply in the Permian Basin. The rating also reflects updated projections following Kodiak’s Q3 2025 earnings report.

The company achieved total revenue of $322.7 million in Q3 2025, which was driven by record Contract Services revenue of $297.0 million, a 4.5% increase year-over-year. Kodiak Gas Services Inc. (NYSE:KGS) also reported an adjusted net income of $31.5 million, or $0.36 per diluted share. The company also implemented a new ERP system in Q3 on time and under budget, which management expects will integrate AI to further enhance real-time operational visibility and efficiency.

Mizuho Praises Kodiak Gas Services' (KGS) Capital Plan and Strategy Amid Tight Permian Gas Supply

For 2026, Kodiak reported being effectively fully contracted for the coming year, supported by long lead times for new compression equipment that now stretch beyond 60 weeks. Despite a slight pullback in interest for electric-driven compression due to power grid access issues in the Permian Basin, the company deployed ~60,000 new horsepower this quarter. Consequently, management raised its full-year 2025 guidance for discretionary cash flow to a range of $450 to $470 million, while maintaining its Adjusted EBITDA guidance between $700 and $725 million.

Kodiak Gas Services Inc. (NYSE:KGS) operates contract compression infrastructure for customers in the oil and gas industry in the US. It operates in two segments: Contract Services and Other Services.

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Disclosure: None. This article is originally published at Insider Monkey.