Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - CFRA has raised its price target on Targa Resources (NYSE:TRGP) to $177.00 from $168.00 while maintaining a Hold rating on the stock. The $36.6 billion market cap company, which currently offers a 2.4% dividend yield and has maintained dividend payments for 15 consecutive years, is currently trading above its InvestingPro Fair Value.
The price target increase reflects a combination of EV/EBITDA and DCF model analyses, with CFRA applying a 10x multiple of EV to projected 2026 EBITDA, yielding a value of $167 per share. For context, Targa currently trades at an EV/EBITDA multiple of 12.9x based on last twelve months’ EBITDA of $4.06 billion.
CFRA’s DCF model, based on a free cash flow growth rate of 7.7% for 10 years and terminal growth of 2.0%, discounted at a WACC of 6.2%, yields an intrinsic value of $187 per share.
The firm has increased its 2025 EPS estimate by $0.55 to $8.38 and its 2026 forecast by $1.00 to $9.95, noting strong pipeline volumes in Q2 in both the Gathering & Processing and Logistics & Transportation segments.
The Permian continues to be the major growth driver of Targa’s project backlog, with the company adding more connectivity to key end markets, though guidance on 2025 EBITDA remains unchanged and implies only a small uptick in the second half of 2025 versus the first half.
In other recent news, Targa Resources Inc . reported its second-quarter 2025 earnings, which exceeded analyst expectations for earnings per share (EPS) but did not meet revenue forecasts. The company achieved an EPS of $1.90, slightly above the projected $1.88, marking a 1.06% surprise. However, its revenue of $4.26 billion fell short of the anticipated $4.77 billion, missing the forecast by 10.69%. These recent developments highlight a mixed performance for Targa Resources, with earnings surpassing expectations but revenue falling behind. Despite the revenue miss, there was a positive pre-market reaction. Analysts and investors may continue to monitor how the company addresses these revenue challenges in future quarters.
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