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On Monday, Citi analysts increased the price target on Targa Resources (NYSE:TRGP) shares, raising it from $218.00 to $227.00, while reiterating a Buy rating on the stock. The adjustment reflects the company’s rapid infrastructure development and benefits from a recent financial transaction. The stock, currently trading at $200.36, has demonstrated remarkable momentum with a 110.71% return over the past year. InvestingPro analysis suggests the stock is trading above its Fair Value, though it offers 12 key insights for investors seeking deeper analysis.
Targa Resources, with its substantial market capitalization of $43.89 billion, recently announced a series of new growth initiatives that are progressing faster than expected. These include a new intra-basin pipeline, the construction of Frac 12, and an expansion of its LPG export capabilities. Additionally, the company is considering a long-haul pipeline and is planning to add more processing capacity by 2027. With annual revenue of $16.38 billion, these expansions could significantly impact the company’s market position.
The analysts noted that this increased capital expenditure is anticipated to drive at least double-digit growth in EBITDA over the next two years. Although Targa Resources may not meet its capital return framework of 40-50% in 2025, analysts expect the company to be able to return at least 40% capital through dividends and share repurchases by 2026.
Citi’s analysis suggests that Targa Resources is positioned as one of the fastest-growing companies they cover. The firm projects a 5-year EBITDA compound annual growth rate (CAGR) of 10% and an EPS CAGR of 18%, bolstered by the impact of share buybacks.
In other recent news, Targa Resources reported fourth-quarter 2024 revenue of $4.41 billion, slightly below the analyst estimate of $4.42 billion. Despite this, the company achieved record adjusted EBITDA for the quarter, driven by strong volume growth in its Permian operations. Net income for the quarter rose to $351.0 million from $299.6 million in the previous year, with adjusted EBITDA increasing 17% year-over-year to $1.12 billion. For 2025, Targa expects adjusted EBITDA to range between $4.65 billion and $4.85 billion, indicating a 15% growth at the midpoint compared to 2024.
In addition to its financial results, Targa Resources announced the appointment of Jennifer R. Kneale as President, effective March 1, 2025. The company did not disclose any changes to her compensation or the strategic implications of her new role. Meanwhile, CFRA raised Targa’s stock target to $208, maintaining a Hold rating, while Stifel increased its target to $229, retaining a Buy rating. Mizuho (NYSE:MFG) also raised its target to $226, with an Outperform rating, reflecting confidence in Targa’s growth prospects in the Permian Basin.
Stifel analysts noted that Targa’s higher-than-expected capital expenditures have sparked investor concerns but view these expenditures as a response to elevated production levels. They believe this will drive long-term cash flow and support the company’s financial strategy. Mizuho’s analysis highlighted Targa’s strong performance and growth potential, particularly in the Permian region, which contributed to their positive outlook.
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