Nucor earnings beat by $0.08, revenue fell short of estimates
On Wednesday, Citi reiterated its Buy rating on Targa Resources (NYSE:TRGP) shares, maintaining a price target of $150.00. The firm's analysts predict a third-quarter EBITDA of $1.02 billion for Targa Resources, slightly surpassing the Street's average estimate of $1.0 billion. The forecast is based on the company's continued execution of its growth strategy, which includes a significant increase in Permian volumes.
Targa Resources is expected to report a sequential increase in EBITDA, attributed to a variety of factors. Management had previously indicated an approximate 200 million cubic feet per day growth in Permian volumes during the second-quarter earnings call in August.
This growth is believed to have persisted throughout the quarter. The company's recent processing capacity additions, downstream volume expansion, a full quarter contribution from Frac Train 9, and robust export performance are all seen as contributing factors to the anticipated growth in both of Targa's operating segments.
The firm also anticipates that Targa Resources will continue to repurchase shares, although potentially at a reduced rate compared to the second quarter of 2024. While the company is not expected to provide a 2025 outlook until the fourth-quarter earnings report, management is likely to signal a strong exit rate for 2024. This optimism is based on the progress of projects like Daytona, GCF, and Greenwood II, which are either currently ramping up or are expected to start operations soon.
Investors will be looking to see if Targa Resources can maintain its momentum and execute on its growth backlog, as suggested by the positive outlook from Citi. The company's third-quarter performance will be a key indicator of its ability to leverage its recent capacity expansions and volume growth to drive profitability.
In other recent news, Targa Resources Corp. has announced a series of strategic financial moves. The company extended its credit facility to August 2025, ensuring continued access to capital for its working capital requirements. Targa also issued $1 billion in 5.5% Senior Notes due in 2035, with proceeds earmarked for various corporate purposes, including debt repayment.
RBC Capital has maintained an Outperform rating on Targa's stock, following the company's robust second-quarter results for 2024 and an upward revision of its full-year guidance. The company's intensified share buyback activities and expected shift to positive free cash flow were noted as positive indicators of financial health.
In addition, Targa reported a record second quarter for 2024, with a record adjusted EBITDA of $984 million, driven by increased volumes, especially in the Permian assets. The company also appointed Will Byers as the new Chief Financial Officer and announced its participation in the Blackcomb pipeline joint venture. These recent developments underscore Targa's commitment to enhancing its operations and financial health.
InvestingPro Insights
To complement Citi's positive outlook on Targa Resources (NYSE:TRGP), recent data from InvestingPro provides additional context for investors. The company's market capitalization stands at $32.99 billion, reflecting its significant presence in the energy infrastructure sector. Targa's P/E ratio of 31.5 suggests that investors are pricing in strong growth expectations, aligning with Citi's optimistic EBITDA forecast.
InvestingPro Tips highlight that Targa Resources has raised its dividend for 3 consecutive years, with a current dividend yield of 1.99%. This consistent dividend growth, coupled with a 50% dividend increase over the last twelve months, underscores the company's commitment to shareholder returns. This aligns well with Citi's expectation of continued share repurchases, albeit potentially at a slower pace.
The company's strong financial performance is further evidenced by its impressive stock price performance, with a 76.46% year-to-date total return and an 84.83% return over the past year. Trading near its 52-week high at 95.5% of that level, Targa's stock reflects investor confidence in its growth strategy and operational execution.
For readers seeking more comprehensive analysis, InvestingPro offers 14 additional tips for Targa Resources, providing deeper insights into the company's financial health and market position.
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