On Monday, UBS upheld its Buy rating on Targa Resources Corp (NYSE:TRGP) with a steady stock price target of $147.00. UBS has made slight adjustments to its second-quarter 2024 EBITDA estimate for the company, increasing it to $936 million from the previous $931 million.
This revision is attributed to robust volume growth in the Permian Basin, which is expected to surpass prior estimates. The new forecast positions UBS's estimate approximately 2.1% higher than the consensus estimate of $917 million for the same period.
For the first quarter of 2024, UBS projects that Targa Resources will have capital expenditures of $692 million, an increase from the earlier estimate of $670 million. The anticipated Gathering & Processing operating margin for the first quarter is $544 million, which is slightly down from the $556 million previously projected. This is due to increased operating expenses stemming from a fire at the Greenwood plant, although this was somewhat mitigated by higher volumes in the Permian region.
Moreover, the firm anticipates the Logistic and Transportation operating margin to be around $502 million, a decline from the $532 million forecasted earlier. These quarter-over-quarter adjustments are primarily influenced by seasonal factors but are also balanced by the impact from Frac 9 for half of the quarter.
The UBS analysis reflects a nuanced view of Targa Resources' financial outlook, taking into account both operational challenges and areas of growth. The firm's maintained Buy rating and price target suggest a positive outlook on the stock's future performance.
In other recent news, Targa Resources Corp. has undergone significant leadership changes. Jennifer R. Kneale has been appointed President - Finance and Administration, transitioning from her previous role as CFO.
William A. Byers, bringing extensive experience from Manchester Energy, LLC, and Navitas Midstream Partners, LLC, is slated to take over as CFO. These changes are part of Targa's long-term development plans to enhance operational capabilities.
The company has also reported record Q1 results, including increases in adjusted EBITDA, Permian volumes, and LPG export volumes. Targa Resources projects a robust adjusted EBITDA for the full year of 2024, despite current weakness in natural gas and NGL prices.
Analyst firms RBC (TSX:RY) Capital and Truist Securities have also provided their insights on Targa Resources. RBC Capital reaffirmed its Outperform rating, citing the company's growth prospects in the Permian Basin and shift towards positive free cash flow.
Truist Securities raised its price target from $120 to $125, maintaining a Buy rating, indicating confidence in Targa's operational performance and predominantly fee-based business model. These recent developments provide investors with important information about Targa Resources Corp.
InvestingPro Insights
UBS's optimistic outlook on Targa Resources Corp (NYSE:TRGP) is echoed by several metrics and InvestingPro Tips that highlight the company's financial performance and potential. With a market capitalization of $28.97 billion and a P/E ratio standing at 26.35 for the last twelve months as of Q1 2024, TRGP shows significant size and a valuation reflecting investor confidence.
The company's revenue for the same period was substantial at $16.1 billion, although it experienced a revenue decline of 21.42% compared to the previous year. On the other hand, the gross profit margin remained robust at 32.46%, indicating healthy profitability.
Investors may be interested in the fact that TRGP has maintained dividend payments for 14 consecutive years, with a notable dividend growth rate of 114.29% and a dividend yield of 2.33% as of the middle of 2024.
Moreover, the stock has experienced a strong return over the last year, with a one-year price total return of 73.41%, and it is trading near its 52-week high, at 99.97% of the peak price. This suggests that the stock has momentum, which is further supported by a six-month price total return of 50.07%.
InvestingPro Tips further reveal that TRGP's stock price movements have been quite volatile, and its short-term obligations exceed its liquid assets, which could be a point of consideration for risk-averse investors. Still, the company has been profitable over the last twelve months, and analysts predict it will remain profitable this year.
For those interested in further insights and tips, there are additional 11 InvestingPro Tips available for TRGP, which can be accessed by visiting https://www.investing.com/pro/TRGP. To enhance your investment research, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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