Targa Resources Corp. Sees Strong Growth Amid Market Fluctuations
Based in Houston, Texas, Targa Resources Corp. (TRGP) is a prominent energy infrastructure company that owns, operates, acquires, and develops a range of complementary domestic infrastructure assets. With a market capitalization of $43.4 billion, TRGP also provides NGL balancing services and transportation services to refineries and petrochemical companies.
Typically, companies valued at $10 billion or more are classified as “large-cap stocks,” and TRGP comfortably fits this classification due to its significant market cap. This underlines its size, influence, and leadership in the oil and gas midstream sector. The company excels with its large-scale infrastructure, strategically located in high-production areas, and robust cash flow generation through fee-based contracts. Additionally, Targa has capitalized on growing global demand by increasing its NGL exports.
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Currently, Targa Resources is trading at 8.9% below its 52-week peak of $218.51, achieved on January 22. Over the last three months, TRGP shares have surged 15.3%, outpacing the First Trust Nasdaq Oil & Gas ETF’s (FTXN) gain of 9.2% during the same period.
In a longer view, TRGP has rallied nearly 82.4% over the past year, significantly outperforming FTXN’s 5% decline. Year-to-date, TRGP shares have increased by 11.5%, while FTXN has gained 4.4%.
To validate this bullish trend, TRGP has consistently traded above its 200-day moving average for the past year. However, it has been below its 50-day moving average since early March.
On February 20, TRGP shares dropped 2.7% following a mixed Q4 earnings release. The fourth-quarter revenue increased by 3.9% year-over-year to $4.4 billion, exceeding Wall Street predictions. Nevertheless, its adjusted earnings of $1.44 per share fell below the consensus estimate of $1.88. This shortfall was partly due to lower-than-expected operating margin growth in its gathering and processing segment, as a lower-margin high-pressure gathering agreement expired in the Delaware Basin, impacting its otherwise solid performance and contributing to the earnings miss.
When compared to its rival, Enterprise Products Partners L.P. (EPD), TRGP’s outperformance is particularly striking. EPD gained 17.6% over the past 52 weeks and 8.7% on a year-to-date basis.
Due to TRGP’s impressive performance, analysts hold a positive outlook for its future. The stock carries a consensus rating of “Strong Buy” from 19 analysts, and the average price target of $224.30 implies a 12.7% upside from current levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For further details, please view the Barchart Disclosure Policy here.
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