Investing.com – TD Cowen upgraded Targa Resources () to Buy from Hold on Wednesday and raised its price target to $350 from $275. The stock currently trades at $285.07, up 71% over the past year, though InvestingPro data suggests it may be overvalued relative to its Fair Value estimate. The company carries a market cap of $61.13 billion.
The firm named Targa Resources as its top midstream pick, citing the company’s positioning to capture wet gas growth in the Permian Basin. TD Cowen forecasts 17 new processing plants from 2026 through 2030 and two additional plants thereafter.
The upgrade is underpinned by Targa Resources’ expected market share maintenance and its relationship with Permian growth leader . TD Cowen projects the company’s valuation multiple will contract from 13 times in 2026 to 8.6 times in 2030, compared to a peer average of 9.1 times in 2030. The stock currently trades at a P/E ratio of 27.23 with an attractive PEG ratio of 0.54, suggesting reasonable valuation relative to growth prospects.
The firm expects Targa Resources’ free cash flow yield to improve from 6% in 2026 to more than 10% from 2028, compared to a peer average of 8.5% in 2030. The projected growth is driven by new processing plants and completion of the Speedway NGL pipeline project.
TD Cowen estimates Targa Resources will generate $4 billion in annual excess cash flow from 2028 through 2030, which could result in capital structure improvements.
In other recent news, Targa Resources reported second-quarter 2026 earnings per share of $2.81, surpassing Wall Street’s estimate of $2.74, although its revenue of $4.44 billion fell short of the anticipated $4.84 billion. The company’s adjusted EBITDA rose 38% year-over-year to $1.603 billion, a record for the quarter, exceeding both Raymond James’ estimate of $1.450 billion and the Street’s estimate of $1.466 billion. In light of these strong results, Raymond James raised its price target for Targa Resources to $335, maintaining a Strong Buy rating.
Additionally, Targa Resources announced new 20-year midstream agreements with ExxonMobil subsidiaries, focusing on integrated natural gas gathering and processing in the Permian Basin. Wells Fargo responded to these agreements by raising its price target for Targa Resources to $324 while keeping an Overweight rating. The deals are expected to support growth through 2046, establishing a significant area of mutual interest in the Permian Delaware for gathering and processing. These developments highlight Targa’s strategic positioning and growth potential in the energy sector.
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