On Tuesday, Mizuho Securities maintained its positive stance on Targa Resources Corp. (NYSE:TRGP), increasing its price target to $181.00 from the previous $147.00 while reiterating an Outperform rating on the stock. The firm anticipates a record quarter for the company, driven by several factors contributing to its growth.
The analyst at Mizuho highlighted the expected continued volume growth in the Permian region, along with the full contribution from Roadrunner II and Train 9, and the partial contribution from the GCF Fractionator. These elements are seen as key drivers of the company's performance.
Targa Resources' shares have shown significant momentum, with an impressive one-year return of 86.6% compared to the AMEI index's 31.7%. This performance is particularly noteworthy given that the company has not benefited as directly from the bullishness around AI/data center sectors that has impacted other names in the sector.
The firm's analyst believes that the accelerated growth for Targa Resources, a premium name in the Midstream sector, is justified given the general expansion of Midstream valuations. With the absence of negative catalysts on the horizon, the Outperform rating has been reiterated.
Mizuho's outlook for Targa Resources is positive, underlining the company's growth prospects and what is considered a still reasonable valuation based on the 2026 estimates. The firm remains confident in the company's ability to continue outperforming in its sector.
In other recent news, Targa Resources has been in the spotlight with several significant developments. The company reported a strong earnings forecast, with a projected annual EBITDA growth of approximately $399 million, according to BofA Securities. This growth is expected to be driven by an anticipated 8% increase in the company's operations, tied to the Permian Basin's projected 6%+ growth in Natural Gas Liquids (NGL) production.
Targa Resources has also declared a quarterly cash dividend of $0.75 per share for the third quarter of 2024. The company's financial strides have been recognized by Barclays, which upgraded its price target due to expected growth in the Gathering & Processing (G&P) segment. Additionally, Targa Resources has issued $1 billion in 5.5% Senior Notes due in 2035, a move that further solidifies its financial position.
Analysts have been largely positive about Targa Resources' prospects. BofA Securities has initiated a Buy rating on the company's stock, citing strong ties to the growth in the Permian Basin. Similarly, Citi has maintained a Buy rating, predicting a third-quarter EBITDA of $1.02 billion, slightly above the average estimate. RBC Capital has also maintained an Outperform rating on Targa's stock, following the company's robust second-quarter results for 2024.
Other recent developments include the extension of Targa Resources' credit facility to August 2025, ensuring continued access to capital for its working capital requirements. The company has also announced the appointment of Will Byers as the new Chief Financial Officer and its participation in the Blackcomb pipeline joint venture.
InvestingPro Insights
Targa Resources Corp.'s strong performance, as highlighted by Mizuho Securities, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $35.43 billion, reflecting its significant presence in the midstream sector.
InvestingPro Tips reveal that Targa Resources has maintained dividend payments for 14 consecutive years, demonstrating a commitment to shareholder returns that aligns with its strong market position. This is particularly relevant given Mizuho's positive outlook on the company's growth prospects.
The stock's recent performance has been remarkable, with InvestingPro data showing a 91.03% price total return over the past year, closely matching the 86.6% return mentioned in the article. This outperformance is further emphasized by the stock trading near its 52-week high, at 96.38% of that peak.
While the P/E ratio of 33.89 suggests a premium valuation, it may be justified by the company's growth potential, as outlined in Mizuho's analysis. The expected record quarter and continued volume growth in the Permian region could support this valuation.
For investors seeking a deeper understanding of Targa Resources' potential, InvestingPro offers 13 additional tips, providing a comprehensive view of the company's financial health and market position.
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