Valued at a market cap of $43.4 billion, Targa Resources Corp. (TRGP) is an energy infrastructure company specializing in midstream services, including the gathering, processing, and transporting of natural gas and natural gas liquids. The Houston, Texas-based company operates primarily in North America, with a strong presence in Mont Belvieu, TX, and the Permian Basin.
Shares of Targa Resources have significantly outperformed the broader market over the past 52 weeks. TRGP stock has jumped 131.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 30.6%. In 2024, shares of TRGP are up 129.1%, compared to SPX's 23.6% gain on a YTD basis.
Looking closer, TRGP has also outpaced the Energy Select Sector SPDR Fund's (XLE) 13.3% return over the past 52 weeks and a 14.5% YTD gain.
Shares of Targa Resources surged 4.9% on Nov. 5 after the company reported strong Q3 2024 earnings of $1.75 per share, beating expectations, driven by higher Permian Basin volumes, robust NGL sales, and lower product costs. The company's Logistics and Transportation segment also outperformed, posting a 35% year-over-year increase in operating margin, bolstered by pipeline and LPG export growth. Positive guidance for 2024, including expected adjusted EBITDA growth, a planned dividend increase for Q1 2025, and continued infrastructure expansion in the Permian Basin, further fueled the market's positive reaction.
For the current fiscal year, ending in December, analysts expect TRGP's EPS to grow 70.2% year-over-year to $6.23. The company's earnings surprise history is mixed. It beat the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 19 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 17 “Strong Buy” ratings and two “Moderate Buys.”
This configuration is slightly more bullish than three months ago, with 16 “Strong Buy” ratings on the stock.
On Nov. 15, Truist raised its price target on Targa Resources to $225 and maintained a “Buy" rating, noting the company’s strong performance and the potential for free cash flow in 2025 to be up to 10 times higher than this year.
As of writing, TRGP is trading above the mean price target of $190.55. The Street-high price target of $225 implies a potential upside of 13.1%.
