Targa Resources stock target increased, holds Overweight on strong outlook By Investing.com

On Monday, JPMorgan updated its stance on Targa Resources Corp (NYSE:), increasing the price target to $145 from $140, while reaffirming an Overweight rating on the stock. The revision follows a review of the company’s potential performance, taking into account market commodity prices and recent discussions with the company’s management.

The analyst projects a robust second quarter for Targa Resources, with an adjusted EBITDA forecast of $936 million. This estimate surpasses the consensus median of $921 million. The positive adjustment is based on the company’s performance and management’s commentary indicating stronger-than-expected Permian inlet volume growth, which is anticipated to continue through 2024 and into 2025.

Targa Resources’ Gathering and Processing (G&P) segment is expected to contribute $564 million for the quarter, bolstered by high volume and the recent commencement of the Roadrunner II plant. Moreover, the company managed to resume operations at the Greenwood plant earlier than anticipated in early June, after addressing downtime concerns that were not expected to significantly affect Midland volumes in the second quarter.

The company’s Logistics and Marketing (L&M) division is also anticipated to deliver strong results, with a $501 million contribution, factoring in the effects of the Train 9 facility becoming operational in May. This performance is further supported by downstream benefits from Permian growth and a marketing boost from wide Waha differentials, which allow for the sale of gas into premium markets.

Investors and analysts are awaiting further insights from the company regarding its 2024 adjusted EBITDA guidance, detailed volume growth expectations through 2025, and the latest processing plant requirements.

Management is also expected to emphasize their disciplined approach to capital allocation, including the potential for buybacks, given the stock’s growth prospects that are believed to be currently undervalued by the market.

In other recent news, Targa Resources Corp. announced significant changes in its executive team. Jennifer R. Kneale, the former CFO, has been appointed as President – Finance and Administration, while William A. Byers steps into the CFO role. These changes come as part of Targa’s strategic plan to enhance its leadership team and operational capabilities.

In financial news, Targa Resources reported record Q1 results, including increases in adjusted EBITDA, Permian volumes, and LPG export volumes. The company has also unveiled ambitious growth plans, including construction of new facilities and an increase in LPG export capacity. Despite current weakness in and NGL prices, the company projects a robust adjusted EBITDA for 2024.

Analyst firms RBC Capital and Truist Securities have shown 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 operational performance and predominantly fee-based business model. These recent developments provide investors with a clearer understanding of Targa Resources’ recent activities and future prospects.

InvestingPro Insights

Following JPMorgan’s updated outlook on Targa Resources Corp (NYSE:TRGP), a deeper dive into the company’s financials and market performance offers additional insights. The firm’s market capitalization stands at $28.87 billion, reflecting its significant presence in the energy sector. Investors may note that the company trades with a Price/Earnings (P/E) ratio of 26.45, which has adjusted slightly to 26.21 over the last twelve months as of Q1 2024, indicating a stable valuation relative to earnings.

An interesting aspect for dividend-seeking investors is Targa Resources’ consistent track record of dividend payments, having maintained them for 14 consecutive years. The dividend yield as of mid-2024 is 2.33%, which accompanied by a remarkable dividend growth of over 114% in the same period, showcases the company’s commitment to shareholder returns. Moreover, the stock has experienced a strong price uptick, with a 73.41% one-year total return and currently trades near its 52-week high, at 99.74% of the peak price.

For those considering a deeper analysis of Targa Resources, there are even more InvestingPro Tips available that can guide investment decisions. With the use of coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking valuable insights. Discover a total of 12 additional InvestingPro Tips for Targa Resources by visiting https://www.investing.com/pro/TRGP, which could further inform your investment strategy.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.