Wolfe Research has downgraded ONEOK Inc. (NYSE: OKE) to Peerperform from Outperform, pointing to underwhelming fourth-quarter results and fiscal 2026 guidance that it characterizes as disappointing. The firm emphasized that the company’s growth trajectory looks more challenged going forward and that the stock’s valuation is less compelling against the weaker financial outlook.
The downgrade follows a pattern among analysts: InvestingPro data referenced by the firm shows five analysts have reduced earnings estimates for the upcoming period. Wolfe Research also noted that year-to-date share movement reflects, in part, a broader energy sector trade rather than company-specific improvements.
At the center of Wolfe Research’s concern is ONEOK’s 2026 EBITDA outlook. The firm projects 2026 EBITDA will be flat year-over-year even after incorporating $150 million of expected synergies. That projection stands in contrast to ONEOK’s recent performance; the company generated $7.34 billion in EBITDA over the last twelve months, and the lack of near-term growth marks a departure from historical trends.
Wolfe Research highlighted segment-level guidance as a headwind to growth. Core natural gas liquids (NGL) and gathering and processing segment volumes are guided to be roughly flat in 2026 and, in a scenario where oil is $60 per barrel, those segments are expected to contribute less than $100 million of incremental EBITDA year-over-year.
Looking further out, Wolfe Research anticipates some incremental growth in 2027 and 2028 from projects such as a new plant, a fractionator and an export dock. However, the firm flagged uncertainty about the export dock’s contracting position and cautioned that project execution and commercial arrangements will be key to realizing that potential upside.
The firm also quantified potential headwinds tied to regional commodity dynamics. Based on historical disclosures, Wolfe Research estimates roughly $100 million of EBITDA pressure in 2027 stemming from narrower Permian gas spreads.
On a multi-year basis, Wolfe Research models a modest recovery, forecasting a 3-4% compound annual growth rate (CAGR) in EBITDA over 2025-2028. When combined with a roughly 5% dividend yield, the analyst team concluded that the expected total return falls short of its 10%-plus target for recommending the stock at an Outperform rating.
ONEOK currently offers a 5.16% dividend yield and, according to InvestingPro, has maintained dividend payments for 56 consecutive years. Despite Wolfe Research’s caution, InvestingPro’s own analysis suggests the stock may be undervalued on current metrics, trading at $82.89 with a price-to-earnings ratio of 15.26.
Recent corporate results were mixed. For the fourth quarter of 2025, ONEOK reported an earnings-per-share (EPS) outcome of $1.55 versus an expectation of $1.54, a modest 0.65% beat. Revenue for the quarter totaled $8.44 billion, however, missing the forecast of $9.33 billion by 9.54%. That revenue shortfall has drawn investor attention despite the slight EPS beat.
There were no recent updates on mergers or acquisitions, and analyst commentary beyond the Wolfe Research action was not detailed in the company disclosures referenced. For investors, the combination of flat near-term EBITDA guidance, project execution uncertainties and regional spread dynamics frames the primary considerations when assessing ONEOK’s medium-term outlook.
Summary
Wolfe Research downgraded ONEOK to Peerperform from Outperform after weak Q4 results and guidance that implies flat 2026 EBITDA even with planned synergies. The firm sees limited near-term growth, potential headwinds from Permian gas spreads, and uncertainty around project contracting, particularly an export dock.
Key points
- Wolfe Research lowered ONEOK’s rating citing disappointing fiscal 2026 guidance and weak Q4 results; five analysts have cut earnings estimates for the upcoming period.
- 2026 EBITDA is expected to be flat year-over-year despite $150 million of synergies; core NGL and gathering and processing volumes are guided to be roughly flat and add less than $100 million of EBITDA in a $60 oil case.
- Longer-term upside hinges on projects including a new plant, fractionator and export dock, but contracting uncertainty and an estimated $100 million 2027 headwind from narrower Permian gas spreads present risks.
Risks and uncertainties
- Growth risk - 2026 EBITDA is projected to be flat even after synergies, limiting near-term earnings growth for midstream and NGL segments.
- Project and contracting uncertainty - expected gains from an export dock and other projects are contingent on contracting terms and execution.
- Commodity spread pressure - Wolfe Research estimates about $100 million of EBITDA headwinds in 2027 from narrower Permian gas spreads, affecting the natural gas and midstream sectors.