Goldman Sachs downgraded Hess Midstream Partners LP (NYSE:HESM) to Sell from Neutral, assigning a 12-month price target of $32.
The firm indicated it saw approximately 7% downside to its target price, compared with an average 13% upside across its coverage universe. While acknowledging HESM as a high-quality midstream operator with strong contractual visibility and sponsor backing, Goldman Sachs argued that the current valuation presented an unfavorable risk-reward profile.
The downgrade was driven by expectations of slower volume growth relative to peers, attributed to a plateauing production outlook from Chevron in the Bakken basin. Additionally, analysts highlighted long-term recontracting risks, noting that legacy fee agreements remained significantly above prevailing market rates.
The firm also pointed to a deceleration in capital return potential and flagged downside risks to consensus EBITDA estimates, with its projections averaging 5% below Street expectations for the 2026–2030 period.
Goldman Sachs noted potential M&A interest, referencing Chevron’s prior acquisition of Noble Midstream and HESM’s strategic relationship with Chevron, but suggested that focus remained on Chevron’s broader Bakken strategy.
While the basin was expected to remain relatively resilient through the end of the decade, the firm concluded that limited near-term catalysts and valuation concerns justified the downgrade.
