Kodiak Gas Services initiated with a Buy at Stifel

Stifel analyst Selman Akyol initiated coverage of Kodiak Gas Services with a Buy rating and $22 price target. With contracts moving toward more favorable conditions, new unit supply constraints, and incoming waves of U.S. LNG facilities, the firm believes the fundamental environment for compression is supportive and it sees Kodiak as “a premier player in contracted compression” given its large horsepower composition, Permian concentration, and high utilization, the analyst tells investors. Kodiak’s leverage “will place it favorably among compression peers” and its intentions to reduce leverage further could position the stock well among the broader midstream space, the analyst added.