Story updated at 10 a.m. to reflect market activity.
Shares of Kinder Morgan gained 1.3% to $37.98 in morning trading.
The analyst firm said the oil and gas pipeline company is "one of our top picks in the broader MLP/energy infrastructure sector." Kinder Morgan's tax shield is underappreciated ahead of its planned acquisition of Kinder Morgan Energy (KMP) , Kenmare Resources (KMR) , and El Paso Pipeline (EPB) , the analysts added.
"Management has guided to KMI benefiting from a total of $20 billion of tax savings over the next 14 years as a result of the asset step-up associated with the pending merger," analysts Gabe Moreen, Ray Fu, Derek Walker, and Kathleen Morris wrote. "We estimate the net present value (NPV) of such tax savings to be $12.5 billion using a 7% discount rate, or ~$6 per share (pro-forma)."
The analyst firm set a price target of $47 for Kinder Morgan.
Separately, TheStreet Ratings team rates KINDER MORGAN INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate KINDER MORGAN INC (KMI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."