UBS initiated coverage on ONE Gas Inc. (NYSE:) shares with a sell rating on Friday, setting a price target of $61.00. The company cited concerns over earnings projections for the years 2026 and 2027, which are estimated to be 3-4% below current market expectations. UBS analysts suggest it may not be until 2028 that ONE Gas can fully recover from the earnings impact of unrecovered expenses.
UBS’s analysis highlights the current valuation of the stock, which trades at a 4% premium based on 2026 earnings estimates, despite expectations of lower-than-average earnings growth and what is seen as regulatory third quartile.
ONE Gas is in the midst of a major tariff case in Kansas, which accounts for 27% of the company’s tariff base. The company is trying to improve its capital ratio and return on equity (ROE) through this process.
The outcome of the Kansas rates case is seen as a potential catalyst for the company, with staff testimony scheduled for July 1. The firm also notes that a more substantial narrowing of the earnings gap may not occur until another rate is concluded. case in Oklahoma, expected in late 2027.
While acknowledging that ONE Gas is pursuing the right strategic direction, UBS says the share price appears to anticipate higher earnings growth than forecasts suggest. The firm expects that negative consensus earnings revisions could impact the performance of ONE Gas shares over the next 12 months.
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