ONE Gas cut to Sell at Guggenheim after disappointing guidance

ONE Gas (NYSE:OGS) -16.8% in Thursday's trading after Guggenheim Securities slapped a Sell rating on the utility, downgrading shares from Neutral and lowering its price target to a Street-low $64 from $70, after issuing lower than expected guidance and "a disappointing roll forward of its five-year plan."

ONE Gas (OGS) cut growth rates by 200 bps for several metrics, citing macroeconomic headwinds such as higher interest rates and inflationary pressures as the key driving factors, along with higher equity needs in order to support a larger expected working capital balance so long as gas prices stay elevated, analyst Shahriar Pourreza said.

The company expects to get back into its prior 6%-8% growth trajectory in the outer years of its planning period, while the next couple of years likely will see roughly flat earnings growth, according to Pourreza, adding that the stock "isn't cheap" at 18.7x on 2024 price to earnings.

The company's outlook "is highly dependent on future constructive regulatory outcomes, in an environment with inflation and material customer bill pressures," the analyst wrote.

ONE Gas (OGS) has weathered the hit from last year's winter storm Uri, capitalizing on strong demand and prices, Fade The Market writes in an analysis newly posted on Seeking Alpha.