Jason Gabelman, an analyst from TD Cowen, maintained the Hold rating on Targa Resources. The associated price target remains the same with $192.00.
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Jason Gabelman has given his Hold rating due to a combination of factors influencing Targa Resources. The company reported strong quarterly results and raised its EBITDA guidance for fiscal year 2025, indicating robust growth in Permian volumes. Despite these positive developments, the company anticipates elevated spending through 2026, with a significant free cash flow (FCF) inflection expected only by late 2027. This delay in FCF inflection is primarily due to large investments in logistics and storage (L&S) coming online.
Furthermore, while Targa Resources plans to increase its dividend and continue share buybacks, the current trading valuation of approximately 10 times the fiscal year 2026 EBITDA aligns with historical levels, suggesting limited upside potential in the near term. The company’s strategy to leverage its integrated footprint, including the Speedway investment, is part of its long-term growth plan. However, the combination of elevated capital expenditures and the uncertainty of oil prices may cause investors to remain cautious, justifying the Hold rating.
In another report released yesterday, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $174.00 price target.