Zacks Investment Research downgraded shares of Kinder Morgan (KMI) from NEUTRAL to UNDERPERFORM on July 19, 2012, with a target price of $32.00.
We are maintaining our Underperform rating on Kinder Morgan Inc, following the lower-than-expected second quarter results. Kinder Morgan's El Paso acquisition, while enabling it to shift toward natural gas, has also raised concern amid a sluggish natural gas price environment. Again, the company took debt to fund the cash portion of the El Paso acquisition, thus keeping leverage metrics high. Though Kinder Morgan is expected to de-lever over time, we believe it may perhaps take several years to reach investment-grade credit metrics. We also remain bearish considering the risks that include a decrease in crude oil production and pricing at the CO2 segment, a decline in refined products or natural gas demand, and rising costs associated with organic growth projects.
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