Targa Resources stock target increased, holding Overweight to strong view by Investing.com
On Monday, JPMorgan updated its stance on Targa Resources Corp (NYSE:), raising the price target to $145 from $140, while reaffirming an overweight rating on the stock. This review follows a review of the company’s potential performance, taking into account market values and recent discussions with the company’s management.
The analyst is projecting a strong second quarter for Targa Resources, with an adjusted EBITDA forecast of $936 million. This estimate exceeds the consensus median of $921 million. The positive correction is based on the company’s performance and management’s comments showing stronger-than-expected Permian installation volume growth, which is expected to continue through 2024 and into 2025.
Targa Resources’ Gathering and Processing (G&P) segment is expected to contribute $564 million in the quarter, bolstered by higher volume and the recent start-up of the Roadrunner II plant. In addition, the company was able to restart operations at the Greenwood plant earlier than expected in early June, after dealing with concerns over a period of downtime that was not expected to significantly affect Midland volumes in the second quarter.
The company’s Logistics and Marketing (L&M) division is also expected to deliver strong results, with a contribution of $501 million, including the results of the Train 9 facility that begins operations in May. This performance is also supported by downstream benefits from Permian growth and marketing improvements from Waha’s wider diversification, which allows gas sales in premium markets.
Investors and analysts are awaiting further information from the company regarding its adjusted EBITDA guidance for 2024, detailed volume growth expectations for 2025, and the latest processing plant requirements.
Management is also expected to emphasize its systematic approach to capital allocation, including buyback opportunities, given the stock’s growth potential which is currently undervalued by the market.
In other recent news, Targa Resources Corp. announced significant changes to its executive team. Jennifer R. Kneale, former CFO, has been named President – Finance and Administration, while William A. Byers steps into the role of CFO. These changes come as part of Targa’s strategic plan to develop its leadership team and operational capabilities.
In financial news, Targa Resources reported record Q1 results, including increases in adjusted EBITDA, Permian volumes, and LPG shipment volumes. The company has also launched ambitious growth plans, including the construction of new facilities and an increase in LPG export capacity. Despite the current weakness in NGL prices, the company projects strong adjusted EBITDA for 2024.
Analyst firms RBC Capital and Truist Securities expressed confidence in Targa’s growth trajectory. RBC Capital has reaffirmed its Outperform rating, citing the company’s growth prospects in the Permian Basin.
Meanwhile, Truist Securities raised its price target from $120 to $125, while maintaining a buy rating, due to the company’s strong performance and primarily fee-based business model. These recent events provide investors with a clear understanding of Targa Resources’ recent activities and future prospects.
InvestingPro Insights
Following JPMorgan’s revised outlook on Targa Resources Corp (NYSE:TRGP), a deeper dive into the company’s financials and market performance provides additional insights. The firm’s market capitalization reached $28.87 billion, indicating its significant presence in the energy sector. Investors may note that the company is trading at a Price/Earnings (P/E) ratio of 26.45, which has slightly changed to 26.21 over the past twelve months from Q1 2024, indicating a stable valuation relative to earnings.
Of interest to dividend investors is Targa Resources’ consistent record of dividend payouts, which has been maintained for 14 consecutive years. The dividend yield as of mid-2024 is 2.33%, which corresponds to an impressive dividend growth of over 114% over the same period, demonstrating the company’s commitment to shareholder returns. In addition, the stock has experienced strong price increases, with a 73.41% one-year total return and is currently trading near its 52-week high, at 99.74% of its peak.
For those considering an in-depth analysis of Targa Resources, there is more InvestingPro Tips available that can guide investment decisions. With the use of a coupon code PRONEWS24, investors can get up to 10% off annual Pro and annual or bi-annual Pro++ subscriptions, which unlock valuable information. Discover a total of 12 additional InvestingPro tips for Targa Resources by visiting that may further inform your investment strategy.
This article was created with the support of AI and reviewed by an editor. For more information see our T&C.
