On Wednesday, Targa Resources (NYSE:TRGP) saw its price target increased to $142.00, up from the previous $128.00, while maintaining a Sector Outperform rating, according to Scotiabank. The revision comes amid expectations of a solid quarterly performance driven by growth in the broader Permian region.
The company, which operates in the midstream natural gas sector, had been cautioned by management in the previous quarter about potential challenges that might lead to a weaker second quarter. However, the analyst believes that the robust volume growth in the Permian Basin likely served as an unexpected buffer, resulting in a forecast that is only marginally lower, by approximately 4% sequentially.
Scotiabank anticipates not only a possible modest increase to Targa Resources' full-year 2024 outlook but also expects the company's management to provide some forward-looking statements. These may include directional comments on the fiscal year 2025 compared to 2024 or details on the growth outlook that has been suggested in recent quarters. Specifically, this outlook includes an illustrative potential for $300 million in EBITDA growth with a capital expenditure of $1.7 billion.
The upgraded price target reflects a more optimistic stance on the company's activities in the Permian region. Scotiabank has expanded the target multiple to 10 times the estimated 2025 EBITDA from the previous valuation, underscoring a positive view on Targa Resources' financial prospects and its position within the energy sector.
In other recent news, Targa Resources Corp has experienced significant developments. Mizuho Securities raised its financial outlook for Targa Resources, increasing the price target to $147 from $130 and maintaining an Outperform rating. This adjustment reflects Targa's strong year-over-year performance and its potential for growth, especially with the anticipation of new projects coming online.
In addition to financial adjustments, Targa Resources announced key leadership changes. Jennifer R. Kneale transitioned from CFO to President - Finance and Administration, and William A. Byers, with over two decades of experience in energy finance, was appointed as the new CFO. These changes are aligned with Targa's long-term development plans and are expected to enhance operational capabilities.
On the analyst front, both RBC Capital and Truist Securities have expressed confidence in Targa Resources. RBC Capital maintained its Outperform rating, citing the company's growth prospects in the Permian Basin and its shift towards positive free cash flow. Truist Securities raised its price target from $120 to $125, maintaining a Buy rating, reflecting their belief in Targa's robust operational performance.
Targa Resources recently reported record Q1 results, including increases in adjusted EBITDA, Permian volumes, and LPG export volumes. The company also revealed plans for new facilities and an increase in LPG export capacity. Despite current weakness in natural gas and NGL prices, Targa Resources projects a robust adjusted EBITDA for the full year of 2024.
InvestingPro Insights
Following the recent price target increase for Targa Resources by Scotiabank, InvestingPro data and tips provide additional context for investors considering the stock. The company's market capitalization stands at $29.89 billion, with a P/E ratio of 27.57 reflecting its earnings over the last twelve months as of Q1 2024. Despite a revenue decline of 21.42% during the same period, Targa Resources has shown a significant one-year price total return of 77.8%, trading near its 52-week high at 98.92% of the peak.
Two notable InvestingPro Tips for TRGP include the dividend growth and analysts' positive revisions. Targa Resources has impressively raised its dividend for 14 consecutive years, with a striking dividend growth of 114.29% in the last twelve months. Additionally, the company has caught analysts' attention, with 2 of them revising their earnings upwards for the upcoming period, signaling confidence in Targa's financial performance.
Investors looking for further insights can find additional InvestingPro Tips on https://www.investing.com/pro/TRGP. For those interested in a deeper analysis, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking a wealth of expert financial information and investment strategies.
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