Even with a steady price appreciation over the past few years, Zacks senior energy analyst Sheraz Mian believes Williams Companies, Inc. (WMB) still has room to grow. The following has been excerpted from his most recent report on the company:
Williams reported strong first-quarter 2007 results and raised its quarterly dividend by 11%. The company's domestic E&P [exploration and production] volumes increased 28% during the quarter, with full-year 2007 growth expected to be in the 20% to 25% range.
Our continued positive outlook for Williams shares reflects the steady progress that management has made in repositioning the company. The company remains well positioned to capitalize on attractive growth opportunities in its low-risk E&P business and also enjoys strong leverage to continued strength in natural gas liquids margins in its midstream business.
Our new $32 price objective, up from $30 before, is based on a sum of the parts approach. Assuming EBITDA [earnings before interest, taxes, depreciation and amortization] multiples of 8.5x the projected 2006 midstream and pipeline segments, putting a $2 per Mcfe [million of cubic feet equivalent] of value on its 3.9 Tcfe [trillion of cubic feet equivalent] in year-end 2006 proved reserve base, and a relatively lower value on the company's reserve upside, we get a $32 value.
Read the analyst report on WMB