Stifel cuts Western Midstream stock price target on margin weakness

Stifel has reduced its price target for Western Midstream Partners (WES) stock to $50 from $55, while retaining a Buy rating for the stock. The downgrade is attributed to weaker per-unit adjusted gross margins across the company's segments and a slightly weaker forward outlook. The firm anticipates higher-margin DJ volumes to decline and a minor asset sale in Wyoming.

Despite these factors, Stifel views the Brazos integration as ahead of expectations, contributing to strong growth in Delaware. The company's expected FY27 capex remains high due to incremental PRB dedications, Solitude spending, and a future processing plant that hasn't been sanctioned yet. Stifel incorporated disclosed financials and forward guidance into its updated model, which led to a decrease in the target price due to lower expected natural gas volumes and weaker liquids margins in the near term.

The stock's current valuation implies about 8.5x 2027E EBITDA, slightly below the midpoint of MLPs and 1.8x below Stifel's Midstream universe average. With shares trading at $41, the stock is close to its 52-week low of $38.44, suggesting it may be undervalued based on their Fair Value analysis. WES offers a significant 9.07% dividend yield, and it has maintained dividend payments for 14 consecutive years, making it one of 11+ exclusive tips available to subscribers.

The latest earnings report for Western Midstream Partners in Q3 2026 showed adjusted earnings per unit of $0.78, missing Wall Street's expectation of $0.92. Revenue for the quarter came in at $1.19 billion, meeting analyst predictions. The company reported a 12% year-over-year increase in adjusted EBITDA, reaching $708 million, which was driven by stronger volumes and recent acquisitions.

Additionally, Western Midstream announced stronger cash flow and record throughput, along with an increase in its full-year guidance. Despite heightened investor scrutiny and evolving market conditions, there have been no recent upgrades or downgrades for Western Midstream from analyst firms. This article was generated with AI assistance and reviewed by an editor.