Targa Resources stock initiated with Hold rating at TD Cowen on growth outlook

Investing.com - TD Cowen has initiated coverage on Targa Resources (NYSE:TRGP) with a Hold rating and a price target of $192.00 on Monday. According to InvestingPro data, analyst targets range from $157 to $244, with the stock currently trading at a P/E ratio of 31.7x and maintaining dividend payments for 15 consecutive years.

The research firm noted that Targa Resources possesses unique attributes that should protect it from headwinds along the Permian NGL well-to-water value chain.

TD Cowen forecasts that the company will continue to add processing volumes at a robust pace through the end of the decade, supported by a strong customer base.

Despite these positive factors, the firm believes that Targa’s growth potential is already reflected in the current stock price, particularly after shares more than doubled in value during 2024.

The Hold rating suggests TD Cowen sees limited upside potential for Targa Resources at current levels, despite acknowledging the company’s strong operational outlook in the natural gas liquids sector.

In other recent news, Targa Resources reported its Q1 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.97 compared to the forecasted $1.95. However, the company faced a revenue shortfall, reporting $4.65 billion against the expected $4.93 billion. Despite this, Targa maintained strong operational performance with a 22% increase in adjusted EBITDA year-over-year. In addition to its earnings report, Targa Resources priced a $1.5 billion senior notes offering, with proceeds intended for debt redemption and general corporate purposes.

Analysts have shown varied reactions to Targa’s recent performance. RBC Capital raised its price target for Targa Resources to $205, maintaining an Outperform rating, citing strong fundamentals and shareholder return potential. Conversely, Stifel adjusted its price target to $216 from $229, while still endorsing a Buy rating, following Targa’s Q1 earnings that met expectations. Targa Resources continues to focus on strategic capital projects and share repurchases, including a 33% increase in its dividend.

The company is actively pursuing a return of capital strategy, reflecting confidence in its operational resilience despite economic challenges. Targa’s management has highlighted strategic acreage commitments and effective hedging strategies as key pillars for future growth. The company expects natural gas production to continue growing at a rate of 2 to 3%, even if Permian crude oil production levels off. These developments underscore Targa’s strategic positioning and financial flexibility in navigating market conditions.

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