On Thursday, Mizuho Securities adjusted its financial outlook for Targa Resources Corp (NYSE:TRGP) shares, a player in the midstream energy sector. The firm increased the price target to $147 from the previous $130 while reaffirming an Outperform rating on the stock.
Targa Resources has demonstrated significant year-over-year outperformance, with a 71.7% increase compared to the AMEI index's 22.4% rise. This performance reflects the market's recognition of the company's strengths, which include its exclusive focus on the Permian Basin, a robust growth trajectory, and a well-regarded strategy for capital allocation.
The adjustment in valuation acknowledges Targa's position in the market, which has shifted from a discount to a premium status. This change is attributed to the company's solid execution and its potential to benefit from various favorable narratives within the midstream sector.
Analysts note that despite not gaining directly from the AI/data center trend, Targa Resources' stock has still managed to outshine many of its peers. This is partly due to expectations of strong earnings driven by high volume growth at the end of the first quarter of 2024, which is likely to enhance the company's downstream operations.
The anticipation of new projects coming online, including Train 9, GCF, and Daytona NGL, has also contributed to the positive outlook. These developments are expected to have a compounding effect on Targa's downstream business segment. With these factors in mind, the firm anticipates an upward revision in the company's guidance come August.
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