Hess Midstream Prepares to Explain Why It Bought Itself From Itself

Hess Midstream Partners LP (HESM) reports first-quarter 2026 earnings before the market opens on Monday, May 4, with analysts expecting $0.65 per share—unchanged from the same quarter last year. The central question is whether the midstream operator can maintain its steady earnings trajectory amid a shifting analyst landscape that has turned notably more cautious, with sentiment deteriorating over the past month and one analyst recently downgrading the stock to a sell rating.

Part 1: Earnings Preview

Hess Midstream Partners LP owns, operates, and develops crude oil, natural gas, and produced water infrastructure in the Williston Basin, primarily serving producers in North Dakota and Montana's Bakken Shale region. The company's integrated network provides gathering, processing, storage, and marketing services for hydrocarbons and produced water.

Hess Midstream is scheduled to report first-quarter 2026 earnings before the market opens on Monday, May 4, with a conference call at 10:00 AM ET. The consensus estimate stands at $0.65 per share from three analysts, with estimates ranging from $0.50 to $0.80. The most recently reported quarter (Q4 2025) delivered $0.72 per share, slightly missing the $0.73 consensus. Comparing to the same quarter last year, the $0.65 estimate represents no year-over-year growth from Q1 2025's reported $0.65.

Three key themes define this earnings story:

Bakken Production Dynamics: Upstream activity levels in the Bakken Shale directly drive throughput volumes across HESM's gathering and processing infrastructure. Investors will scrutinize whether producer activity has remained robust enough to support volume growth, particularly as the company's revenue depends heavily on the health of North Dakota oil production.

Margin Stability in a Shifting Rate Environment: As a fee-based midstream operator, HESM's profitability hinges on maintaining stable processing and transportation margins. With the company posting a 21.8% profit margin in recent quarters, any commentary on contract renewals, fee structures, or cost pressures will be critical to assessing whether margins can hold steady.

Capital Allocation and Distribution Coverage: HESM currently yields 7.46% with a quarterly distribution of $0.764, making distribution sustainability a focal point for income-oriented investors. The company's ability to generate free cash flow while maintaining its payout—particularly with a debt-to-equity ratio of 8.54—will be closely watched for signs of financial flexibility.

Analyst commentary ahead of the release has turned notably cautious. Goldman Sachs downgraded the stock from neutral to sell with a $32 price target on April 20, while Raymond James downgraded from outperform to market perform on January 5. Wells Fargo raised its target modestly from $39 to $40 but maintained an equal weight rating, suggesting limited conviction in near-term upside. The consensus has shifted toward a more defensive posture, with six of seven analysts now rating the stock a hold or sell.

Part 2: Historical Earnings Performance

Hess Midstream has demonstrated a mixed but generally positive earnings track record over the past four quarters. The company beat estimates in three of the last four reports, with the most dramatic outperformance coming in Q2 2025 when it delivered $0.74 against a $0.56 estimate—a +32.14% surprise. Q1 2025 and Q3 2025 also produced modest beats of +3.17% and +2.74% respectively.

The lone miss came in the most recent quarter (Q4 2025), where HESM reported $0.72 versus the $0.73 consensus, a -1.37% shortfall. This represents the first earnings disappointment in a year and breaks a three-quarter streak of beats. The magnitude of the miss was small, but it marks a shift from the consistent outperformance seen earlier in 2025.

The pattern suggests HESM has historically managed to exceed expectations more often than not, though the margin of outperformance varies considerably—from the massive Q2 beat to the narrow Q4 miss. Investors should note that the upcoming Q1 2026 estimate of $0.65 is flat year-over-year, setting a relatively modest bar compared to the volatile estimate ranges seen in prior quarters.

Note: These figures reflect diluted GAAP earnings per share, reported before non-recurring items, and may differ from the non-GAAP figures used by some sources.

Part 2.1: Price Behavior Around Earnings

Hess Midstream typically reports earnings before the market opens, meaning Day 0 represents the first full trading session where investors react to results, while Day +1 captures follow-through momentum.

Historical price behavior shows HESM experiences moderate volatility around earnings, with an average absolute Day 0 move of 1.87% and an average Day 0 range of 3.48%. The Day +1 follow-through is typically smaller, averaging 0.94% with a 2.81% range. The most volatile reaction in the past eight quarters came in July 2025, when the stock surged 3.47% on Day 0 following a significant earnings beat, with continued strength of 1.99% on Day +1. Conversely, the April 2025 report triggered a 3.48% decline on Day 0, though Day +1 saw minimal follow-through at just 0.09%.

The pattern suggests initial reactions tend to be more pronounced than next-day moves, with the stock often establishing its post-earnings direction within the first session. Recent quarters have shown more muted reactions—the February 2026 report produced only a 1.41% Day 0 decline despite the earnings miss, indicating the market may have already priced in some disappointment. Investors should prepare for a potential 2-4% swing on announcement day, with the direction likely hinging on whether HESM can deliver another beat or if the Q4 miss signals a new trend.

Part 2.2: Options Market Expected Move

The options market is pricing a 4.24% expected move through the May 15 expiration (14 days out), which is notably higher than HESM's average historical Day 0 move of 1.87% and even exceeds the average Day 0 range of 3.48%. This suggests options traders are anticipating above-average volatility for this earnings release, potentially reflecting uncertainty around the company's ability to return to its earlier pattern of beats after the Q4 miss.

Part 3: What Analysts Are Saying

Analyst sentiment on Hess Midstream has deteriorated over the past month, with the consensus average recommendation now at 2.71 on the five-point scale—firmly in hold territory and leaning slightly bearish. The current breakdown shows six hold ratings and one strong sell rating among seven analysts covering the stock, with zero buy recommendations. This represents a shift from one month ago when the stock had seven hold ratings and no sell ratings, indicating one analyst has turned notably more negative.

The average price target stands at $37.60, implying 1.4% downside from the current price of $38.12. The range of targets is relatively tight, spanning from a low of $32.00 (16% downside) to a high of $42.00 (10% upside), suggesting limited conviction in either direction. The recent downgrades from Goldman Sachs (to sell with a $32 target) and Raymond James (to market perform) reflect growing concerns about the stock's risk-reward profile at current levels.

The deterioration in sentiment is particularly notable given that it occurred even as the stock has traded relatively flat, suggesting analysts are growing more cautious about fundamentals rather than simply reacting to price action. With the consensus target now below the current trading price and no analysts willing to rate the stock a buy, the analyst community appears to be signaling limited upside potential heading into this earnings report.

Part 4: Technical Picture

The Barchart Technical Opinion currently registers a Buy signal at 24%, unchanged from last week but down sharply from 56% Buy a month ago, indicating a significant deterioration in technical momentum over the past 30 days. This weakening comes despite the stock trading at $38.12, which remains above its longer-term moving averages.

Timeframe Analysis:

• Short-term (Hold): Neutral reading suggests near-term momentum has stalled after the recent decline from monthly highs
• Medium-term (50% Buy): Moderate buy signal indicates the intermediate trend remains constructive but lacks strong conviction
• Long-term (50% Buy): Moderate buy signal reflects a positive longer-term trajectory, though the strength has diminished from earlier levels

Trend Characteristics: The trend is characterized as Weak in strength and Weakest in direction, suggesting the technical setup heading into earnings is fragile and vulnerable to further deterioration on any disappointment.

From a moving average perspective, HESM is trading above its 5-day ($38.07), 10-day ($37.74), 100-day ($36.85), and 200-day ($36.85) averages, but has slipped below its 20-day ($38.15) and 50-day ($38.73) averages. This mixed picture—with the stock above longer-term support but below intermediate-term resistance—suggests the stock is in a consolidation phase. The fact that the 20-day and 50-day averages are both overhead creates technical resistance that could cap upside momentum unless earnings provide a strong catalyst. The overall technical setup is cautionary rather than supportive, with weakening momentum indicators and a lack of conviction in the trend suggesting limited margin for error on the earnings report.