Analyst Jean Ann Salisbury from Bank of America Securities reiterated a Buy rating on Targa Resources and keeping the price target at $200.00.
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Jean Ann Salisbury has given her Buy rating due to a combination of factors that highlight Targa Resources’ strategic positioning and growth potential. A significant portion of Targa’s EBITDA is linked to the Permian Basin’s natural gas liquids, which minimizes rate erosion risks due to their self-processing capabilities. Despite a decline in the outlook for Permian oil growth, driven by unexpected OPEC supply increases, Targa’s volumes and EBITDA are expected to grow due to the Gas to Oil Ratio growth and acreage outperformance.
Moreover, Targa’s largest customer, ExxonMobil, has been growing faster than its peers, contributing to Targa’s volume growth. Even with flat oil prices, Targa is projected to achieve a 7% annual growth in volumes and EBITDA through the decade. The company’s valuation model, based on a flat Permian crude scenario, supports a price objective of $200 per share. Salisbury believes that once the current macroeconomic challenges are resolved, there is significant upside potential for Targa Resources, justifying the Buy rating.
In another report released yesterday, UBS also maintained a Buy rating on the stock with a $228.00 price target.