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On Thursday, Stifel analysts increased the price target for Targa Resources (NYSE:TRGP) shares, setting a new goal of $229.00, up from the previous target of $224.00. The firm maintained a Buy rating on the stock. The updated target reflects Targa’s strong market position, with the company’s market capitalization now reaching $44.8 billion and an impressive 122% return over the past year. Stifel’s analysis followed Targa Resources’ fourth-quarter 2024 earnings, which surpassed both their expectations and the consensus estimates. The company also issued guidance for 2025 that was higher than anticipated. According to InvestingPro data, analysts’ price targets for the stock range from $135 to $259.
Despite the positive financial results and outlook, Targa Resources’ stock experienced a decline of around 4% on Thursday, though it remains near its 52-week high of $218.51. Stifel attributed this drop to investor concerns regarding higher-than-anticipated capital expenditures (capex). These expenditures have raised questions about the company’s narrative on returning capital to shareholders, although InvestingPro data shows the company has maintained dividend payments for 15 consecutive years, with a 50% dividend growth in the last twelve months.
Stifel, however, views the increased capex as a direct consequence of elevated production levels from producers, which should drive cash flow in the long term and extend the period for returning capital to shareholders. The analysts at Stifel believe that this strategy allows Targa Resources to maintain balance sheet flexibility, with a comfortable leverage ratio at 3.4 times. InvestingPro’s Financial Health Score of 2.69 (rated as GOOD) supports this view, though the current ratio of 0.77 suggests some short-term liquidity considerations.
The firm also noted that Targa Resources sees stock buybacks as a flexible component of its strategy to return capital to shareholders. Stifel emphasized that the commitment to higher capex underpins the company’s confidence in its short, medium, and long-term outlook.
In their closing remarks, Stifel analysts reiterated their Buy rating for Targa Resources and expressed their support for the raised target price of $229.00. The firm’s stance reflects an optimistic view on the company’s financial strategy and growth trajectory.
In other recent news, Targa Resources reported fourth-quarter 2024 revenue of $4.41 billion, slightly below analyst estimates of $4.42 billion. Despite the revenue miss, the company achieved a record adjusted EBITDA of $1.12 billion, marking a 17% year-over-year increase. Net income attributable to shareholders rose to $351.0 million, up from $299.6 million in the same period last year, driven by strong volume growth in the Permian Basin. Targa Resources also reported record NGL pipeline transportation and LPG export volumes, contributing to its robust financial performance.
Mizuho (NYSE:MFG) Securities recently raised its price target for Targa Resources to $226, maintaining an Outperform rating. The upgrade reflects the company’s strong performance and growth prospects, especially in the Permian Basin. Analyst Gabriel Moreen from Mizuho highlighted Targa’s expedited final investment decision on two new processing plants in the region. The company’s medium-term growth outlook appears promising, with expectations of continued positive commentary around Permian growth.
For the full year 2025, Targa Resources estimates adjusted EBITDA will range between $4.65 billion and $4.85 billion, representing a 15% growth at the midpoint compared to 2024. The company plans to recommend a 33% increase in its quarterly dividend to $1.00 per share starting in the first quarter of 2025.
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