Tuesday, Western Gas Partners (NYSE:WES) experienced a shift in their stock outlook as Raymond James adjusted their rating from Outperform to Market Perform. The move comes after a notable year for Western Gas, which has been identified as the fourth-best performer in the midstream sector, trailing only behind companies with unique circumstances or acquisition targets.
The firm attributed the downgrade to the stock's substantial gains over the past year, which exceed 35% on a trailing twelve-month basis and nearly 30% since coverage began in April 2023. Western Gas has been buoyed by speculation around its acquisition potential, robust guidance for 2024, and a significant increase in distributions.
Market observers have taken note of Western Gas's performance, and recent discussions indicate a consensus view of the stock being fairly valued, if not overvalued, amidst the current market conditions. This sentiment is further complicated by the uncertainty surrounding Occidental Petroleum's (NYSE:OXY) plans for its approximately 49% stake in Western Gas.
The analyst from Raymond James highlighted the strong trading performance and investor sentiment as key factors in reassessing the stock's rating. The change reflects a tempered outlook on Western Gas's future stock movement, given its recent rapid appreciation and the current market perception of its value.
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