Antero Midstream (AM): Navigating a Neutral Outlook

Antero Midstream Corporation is a midstream energy company focused on owning, operating, and developing assets primarily servicing 'Antero Resources'' production in the Appalachian Basin. The company's assets include gathering systems, compression facilities, water handling and blending facilities, and interests in processing and fractionation plants. Its two reportable segments are gathering and processing, and water handling. Antero Midstream primarily serves 'Antero Resources' under long-term, fixed-fee and cost of service fee contracts. The company differentiates itself through its scalable business model, strategically located assets, disciplined capital investment approach utilizing integrated planning with 'Antero Resources', and long-term customer contracts that limit direct exposure to commodity price risk.

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AM's technical outlook is bearish, indicating a likely downward trajectory over the next 1-3 months. The recent price action confirms a downtrend, with the price declining from a high of $19.82 in late September to close at $17.195 recently. The price is below its 21-day EMA ($18.00), 50-day SMA ($18.37) and 200-day SMA ($17.59), reinforcing the bearish sentiment. Momentum indicators also support this view. The MACD at -0.33 is significantly below its signal line, and the RSI is at 35.91, indicating oversold conditions, which can sometimes precede a bounce but currently suggests continued selling pressure. The Stochastic Oscillator, with %K at 20.23 and %D at 14.88, also points to oversold territory. While the ADX is at 21.53, suggesting a defined trend, the negative directional indicator (DMN) at 28.39 is substantially higher than the positive directional indicator (DMP) at 11.91, further confirming the downtrend. The Bollinger Bands show the price near the lower band, suggesting potential for continued downward movement. Given these indicators, a bearish outlook is warranted.

Antero Midstream's MD&A reveals a positive trajectory, driven by increased throughput volumes and CPI-based adjustments to fees. Total revenues for the three months ended September 30, 2025, increased by 9% to $295 million, and for the nine months ended September 30, 2025, increased by 9% to $891 million. This growth was fueled by increases in both 'gathering and processing' and 'water handling' revenues, up 7% and 18% respectively for the nine-month period. The company connected 65 additional wells to its system since September 30, 2024, contributing to volume growth across low pressure, compression, and high-pressure gathering services. Equity in earnings of unconsolidated affiliates also increased, rising 6% to $88 million for the nine months ended September 30, 2025. Interest expense decreased by 9% to $144 million for the nine months ended September 30, 2025. Net cash provided by operating activities increased to $677 million for the nine months ended September 30, 2025, compared to $611 million in the prior year. The company revised its 2025 capital budget to a range of $170 million to $190 million, supporting Antero Resources' maintenance capital program. The Board declared a cash dividend of $0.2250 per share for the quarter ended September 30, 2025, payable on November 5, 2025.

Antero Midstream's Q2 2025 earnings call presents a moderately bullish outlook. The company reported strong performance, with Brendan Krueger stating that they 'generated $284 million of EBITDA, which was an 11% increase year-over-year.' This growth was primarily driven by record gathering and processing volumes. Consequently, free cash flow after dividends saw an almost 90% increase year-over-year, reaching $82 million. This positive momentum led to an increase in 2025 guidance; adjusted EBITDA guidance was raised by $10 million, and the capital budget range was lowered, resulting in a $5 million reduction at the midpoint. Furthermore, debt reduction efforts and changes in cash income taxes contributed to a $5 million reduction in interest expense and the elimination of cash income taxes through at least 2028. The company is also strategically positioned for LNG and Northeast demand growth, emphasizing its role in connecting low-cost production to premium-priced LNG markets. Management also highlighted over $50 million of savings through their reuse program, including $30 million at the Torrey's Peak compressor station.

AM's financial performance presents a mixed picture. Revenue has seen a slight increase from $296.7M in Q1 2024 to $294.8M in Q3 2025. The gross profit ratio has fluctuated, showing inconsistency, starting at 0.63 in Q1 2024 and currently at 0 in Q3 2025. Operating cash flow has been positive throughout the observed period, with the latest quarter showing $212.8M. Total debt has decreased slightly from $3174.8M in Q1 2024 to $3008.6M in Q3 2025, indicating a slight improvement in solvency. While revenue has remained relatively stable and operating cash flow is positive, the fluctuating gross profit ratio raises concerns about profitability. The company's debt levels have decreased slightly, which is a positive sign. Overall, AM's financial health appears stable but warrants close monitoring to ensure profitability and solvency are maintained.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting effective cost management. Return on Equity (ROE) has improved, showcasing efficient capital allocation. While the Price-to-Earnings (P/E) ratio is elevated, it is potentially justified by the company's growth prospects. The Debt-to-Equity ratio has decreased, reflecting a healthier balance sheet and reduced financial risk. The current ratio is at a healthy level, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable combination of growth, profitability, and balance sheet strength, supporting a positive outlook for the next 12 months, although the high P/E ratio warrants close monitoring.