Goldman Sachs Downgrades Hess Midstream and South Bow Ratings
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 16 hours ago
0mins
Should l Buy HESM?
Source: seekingalpha
- Rating Downgrade Impact: Goldman Sachs downgraded Hess Midstream (HESM) and South Bow (SOBO) to Sell with price targets of $32 and $29 respectively, resulting in a 2.3% drop for HESM and a 1.8% decline for SOBO, with HESM set to close at its lowest in two months.
- Risk and Reward Challenges: Analyst John Mackay noted that while Hess Midstream is a high-quality midstream business, its growth profile may lag peers due to a plateauing production outlook from Chevron (CVX) in the Bakken shale, coupled with significant long-term recontracting risks.
- M&A Potential: Mackay highlighted that Hess Midstream could be a potential M&A target given its strategic partnership with Chevron, especially in light of Chevron's past acquisition of Noble Midstream, which may present strategic value for investors.
- Uncertain Project Outlook: For South Bow, despite management's strong execution since its spinout from TC Energy in October 2024, Mackay remains cautious about the new Prairie Connector project, viewing the recent stock multiple expansion as premature without clear commercial support and a defined investment decision path.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy HESM?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on HESM
Wall Street analysts forecast HESM stock price to fall
3 Analyst Rating
0 Buy
3 Hold
0 Sell
Hold
Current: 37.870
Low
34.00
Averages
36.50
High
39.00
Current: 37.870
Low
34.00
Averages
36.50
High
39.00
About HESM
Hess Midstream LP is a midstream company that owns, operates, develops and acquires a diverse set of midstream assets to provide services to the Company and third-party customers. It owns oil, gas and produces water handling assets that are located in the Bakken and Three Forks Shale plays in the Williston Basin area of North Dakota. Its gathering segment includes Hess North Dakota Pipeline Operations LP and Hess Water Services Holdings LLC, which owns natural gas gathering and compression, crude oil gathering, and produced water gathering and disposal. Its processing and storage segment includes Hess TGP Operations LP and Hess Mentor Storage Holdings LLC, which owns Tioga gas plant, an equity investment in LM4 Joint Venture, and mentor storage terminal. Its terminaling and export segment includes Hess North Dakota Export Logistics Operations LP, which owns Ramberg Terminal Facility, Tioga Rail Terminal, Crude Oil Rail Cars, Johnson's Corner Header System, and other DAPL connections.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Stock Markets Decline Amid Soaring Oil Prices and Geopolitical Tensions
- Oil Price Surge Impacts Markets: The S&P 500 index fell 0.24%, the Dow Jones Industrial Average dropped 0.01%, and the Nasdaq 100 index declined 0.31% on Monday as WTI crude prices surged over 6%, indicating market sensitivity to rising energy costs amid geopolitical tensions.
- Geopolitical Risks Escalate: The closure of the Strait of Hormuz by Iran has raised market concerns, especially following U.S. Navy actions against Iranian tankers, which could exacerbate global oil and fuel shortages, further unsettling investor sentiment.
- Earnings Season Continues: So far, 81% of the 48 S&P 500 companies that reported earnings exceeded expectations, with Q1 earnings projected to rise 12% year-over-year; however, excluding the tech sector, growth is only expected at 3%, highlighting signs of economic weakness.
- Airline Stocks Under Pressure: Airline stocks retreated as rising oil prices weighed on profits, with American Airlines and Alaska Air both down over 4%, reflecting the direct impact of fuel costs on company earnings and potential downward revisions in future profit expectations.
See More
Goldman Sachs Downgrades Hess Midstream and South Bow Ratings
- Rating Downgrade Impact: Goldman Sachs downgraded Hess Midstream (HESM) and South Bow (SOBO) to Sell with price targets of $32 and $29 respectively, resulting in a 2.3% drop for HESM and a 1.8% decline for SOBO, with HESM set to close at its lowest in two months.
- Risk and Reward Challenges: Analyst John Mackay noted that while Hess Midstream is a high-quality midstream business, its growth profile may lag peers due to a plateauing production outlook from Chevron (CVX) in the Bakken shale, coupled with significant long-term recontracting risks.
- M&A Potential: Mackay highlighted that Hess Midstream could be a potential M&A target given its strategic partnership with Chevron, especially in light of Chevron's past acquisition of Noble Midstream, which may present strategic value for investors.
- Uncertain Project Outlook: For South Bow, despite management's strong execution since its spinout from TC Energy in October 2024, Mackay remains cautious about the new Prairie Connector project, viewing the recent stock multiple expansion as premature without clear commercial support and a defined investment decision path.
See More
Energy Transfer and Midstream Stocks Show Strong Distribution Growth Potential
- Energy Transfer Overview: Energy Transfer owns over 140,000 square miles of midstream energy infrastructure, with a forward distribution yield of 7.3% indicating strong growth potential; despite a temporary reduction during the pandemic, distributions have increased by approximately 3.1% over the past year.
- Hess Midstream's Capital Return: Since its IPO in 2017, Hess Midstream has never cut its distribution, currently boasting a forward yield of around 7.9%, and has consistently raised payouts over the past nine years, although management targets a 5% annual growth rate through 2028.
- MPLX's Stable Growth: MPLX has a record of 10 consecutive years of distribution growth, with a current forward yield of 7.4% and an average annual growth rate of 11.6% over the past decade, with expectations to maintain a 12.5% growth rate over the next two years, showcasing strong market appeal.
- Investment Opportunities in Midstream Stocks: As oil prices rise, investors are returning to energy stocks, with midstream stocks like pipeline stocks becoming a strong long-term investment choice due to their lower revenue volatility and stable distribution yields, especially amid rising demand for natural gas.
See More
Energy Stocks Surge as Pipeline Investments Gain Favor
- Investor Shift to Energy Stocks: As oil prices rise, investors are significantly returning to energy stocks, particularly pipeline stocks, which exhibit lower revenue and earnings volatility compared to exploration and production companies, making them suitable for long-term investments.
- Growth Potential of Energy Transfer: Energy Transfer owns over 140,000 square miles of midstream energy infrastructure, and its 442-mile Hugh Brinson Pipeline is expected to supply natural gas to both electric utilities and AI data centers, driving future distribution growth targets of 3% to 5%.
- Stable Returns from Hess Midstream: Hess Midstream has never cut its distribution since going public, currently offering a forward distribution yield of approximately 7.9%, and has consistently increased payouts over the past nine years, targeting 5% annual distribution growth through 2028.
- Strong Distribution Growth of MPLX: MPLX boasts a 10-year track record of distribution growth, with a current forward distribution yield of 7.4%, and a 12.5% growth rate over the past year, with projections indicating continued increases of 12.5% over the next two years.
See More
Hess Midstream Files Annual Report for 2025
- Annual Report Filing: Hess Midstream filed its annual report on Form 10-K for the fiscal year ending December 31, 2025, with the SEC on February 25, 2026, enhancing financial transparency and boosting investor confidence.
- Financial Information Access: Shareholders can access the annual report electronically on the company's website or request printed copies for free via email, demonstrating the company's commitment to shareholder service and aiming to improve shareholder satisfaction.
- Business Overview: Hess Midstream is a fee-based, growth-oriented midstream company focused on owning, operating, and developing a diverse set of midstream assets, primarily serving Chevron and its subsidiaries, highlighting its significant position in the industry.
- Asset Distribution: The company's assets are primarily located in the Bakken and Three Forks shale plays in North Dakota, encompassing oil, gas, and produced water handling, indicating a strategic presence in key energy regions.
See More
Hess Midstream Files Annual Report for 2025
- Annual Report Filing: Hess Midstream filed its annual report on Form 10-K for the fiscal year ended December 31, 2025, with the SEC on February 25, 2026, enhancing financial transparency and bolstering investor confidence.
- Financial Information Access: Shareholders can access the annual report electronically on the company's website or request printed copies free of charge via email, ensuring all investors can conveniently obtain the complete audited financial statements.
- Business Overview: Hess Midstream is a fee-based, growth-oriented midstream company that focuses on owning, operating, and developing a diverse set of midstream assets, providing services to Chevron and its subsidiaries, highlighting its significant role in the industry.
- Asset Distribution: The company primarily owns oil, gas, and produced water handling assets located in the Bakken and Three Forks Shale plays in North Dakota, indicating its strategic positioning in key energy regions.
See More
Stock Markets Decline Amid Soaring Oil Prices and Geopolitical Tensions
- Oil Price Surge Impacts Markets: The S&P 500 index fell 0.24%, the Dow Jones Industrial Average dropped 0.01%, and the Nasdaq 100 index declined 0.31% on Monday as WTI crude prices surged over 6%, indicating market sensitivity to rising energy costs amid geopolitical tensions.
- Geopolitical Risks Escalate: The closure of the Strait of Hormuz by Iran has raised market concerns, especially following U.S. Navy actions against Iranian tankers, which could exacerbate global oil and fuel shortages, further unsettling investor sentiment.
- Earnings Season Continues: So far, 81% of the 48 S&P 500 companies that reported earnings exceeded expectations, with Q1 earnings projected to rise 12% year-over-year; however, excluding the tech sector, growth is only expected at 3%, highlighting signs of economic weakness.
- Airline Stocks Under Pressure: Airline stocks retreated as rising oil prices weighed on profits, with American Airlines and Alaska Air both down over 4%, reflecting the direct impact of fuel costs on company earnings and potential downward revisions in future profit expectations.
See More
Goldman Sachs Downgrades Hess Midstream and South Bow Ratings
- Rating Downgrade Impact: Goldman Sachs downgraded Hess Midstream (HESM) and South Bow (SOBO) to Sell with price targets of $32 and $29 respectively, resulting in a 2.3% drop for HESM and a 1.8% decline for SOBO, with HESM set to close at its lowest in two months.
- Risk and Reward Challenges: Analyst John Mackay noted that while Hess Midstream is a high-quality midstream business, its growth profile may lag peers due to a plateauing production outlook from Chevron (CVX) in the Bakken shale, coupled with significant long-term recontracting risks.
- M&A Potential: Mackay highlighted that Hess Midstream could be a potential M&A target given its strategic partnership with Chevron, especially in light of Chevron's past acquisition of Noble Midstream, which may present strategic value for investors.
- Uncertain Project Outlook: For South Bow, despite management's strong execution since its spinout from TC Energy in October 2024, Mackay remains cautious about the new Prairie Connector project, viewing the recent stock multiple expansion as premature without clear commercial support and a defined investment decision path.
See More
Energy Transfer and Midstream Stocks Show Strong Distribution Growth Potential
- Energy Transfer Overview: Energy Transfer owns over 140,000 square miles of midstream energy infrastructure, with a forward distribution yield of 7.3% indicating strong growth potential; despite a temporary reduction during the pandemic, distributions have increased by approximately 3.1% over the past year.
- Hess Midstream's Capital Return: Since its IPO in 2017, Hess Midstream has never cut its distribution, currently boasting a forward yield of around 7.9%, and has consistently raised payouts over the past nine years, although management targets a 5% annual growth rate through 2028.
- MPLX's Stable Growth: MPLX has a record of 10 consecutive years of distribution growth, with a current forward yield of 7.4% and an average annual growth rate of 11.6% over the past decade, with expectations to maintain a 12.5% growth rate over the next two years, showcasing strong market appeal.
- Investment Opportunities in Midstream Stocks: As oil prices rise, investors are returning to energy stocks, with midstream stocks like pipeline stocks becoming a strong long-term investment choice due to their lower revenue volatility and stable distribution yields, especially amid rising demand for natural gas.
See More
Energy Stocks Surge as Pipeline Investments Gain Favor
- Investor Shift to Energy Stocks: As oil prices rise, investors are significantly returning to energy stocks, particularly pipeline stocks, which exhibit lower revenue and earnings volatility compared to exploration and production companies, making them suitable for long-term investments.
- Growth Potential of Energy Transfer: Energy Transfer owns over 140,000 square miles of midstream energy infrastructure, and its 442-mile Hugh Brinson Pipeline is expected to supply natural gas to both electric utilities and AI data centers, driving future distribution growth targets of 3% to 5%.
- Stable Returns from Hess Midstream: Hess Midstream has never cut its distribution since going public, currently offering a forward distribution yield of approximately 7.9%, and has consistently increased payouts over the past nine years, targeting 5% annual distribution growth through 2028.
- Strong Distribution Growth of MPLX: MPLX boasts a 10-year track record of distribution growth, with a current forward distribution yield of 7.4%, and a 12.5% growth rate over the past year, with projections indicating continued increases of 12.5% over the next two years.
See More
Hess Midstream Files Annual Report for 2025
- Annual Report Filing: Hess Midstream filed its annual report on Form 10-K for the fiscal year ending December 31, 2025, with the SEC on February 25, 2026, enhancing financial transparency and boosting investor confidence.
- Financial Information Access: Shareholders can access the annual report electronically on the company's website or request printed copies for free via email, demonstrating the company's commitment to shareholder service and aiming to improve shareholder satisfaction.
- Business Overview: Hess Midstream is a fee-based, growth-oriented midstream company focused on owning, operating, and developing a diverse set of midstream assets, primarily serving Chevron and its subsidiaries, highlighting its significant position in the industry.
- Asset Distribution: The company's assets are primarily located in the Bakken and Three Forks shale plays in North Dakota, encompassing oil, gas, and produced water handling, indicating a strategic presence in key energy regions.
See More
Hess Midstream Files Annual Report for 2025
- Annual Report Filing: Hess Midstream filed its annual report on Form 10-K for the fiscal year ended December 31, 2025, with the SEC on February 25, 2026, enhancing financial transparency and bolstering investor confidence.
- Financial Information Access: Shareholders can access the annual report electronically on the company's website or request printed copies free of charge via email, ensuring all investors can conveniently obtain the complete audited financial statements.
- Business Overview: Hess Midstream is a fee-based, growth-oriented midstream company that focuses on owning, operating, and developing a diverse set of midstream assets, providing services to Chevron and its subsidiaries, highlighting its significant role in the industry.
- Asset Distribution: The company primarily owns oil, gas, and produced water handling assets located in the Bakken and Three Forks Shale plays in North Dakota, indicating its strategic positioning in key energy regions.
See More
