TRGP: Expanded Permian Volumes Will Support Future Cash Returns And Buybacks

Analysts have trimmed their average price targets on Targa Resources by a few dollars per share to roughly the high $180s to low $200s range, reflecting modestly softer macro assumptions. At the same time, they highlight the company's diversified midstream footprint, resilient Permian growth outlook, and improving cash return profile.

Analyst Commentary

Street research remains constructive on Targa Resources despite modest price target cuts across the coverage universe. Updated models reflect a softer macro backdrop into 2026, but also acknowledge the company’s stronger than expected execution in the quarter and durable growth outlook driven by its Permian franchise and integrated midstream platform.

Bullish Takeaways

• Bullish analysts emphasize that Targa’s diversified footprint and multi basin exposure provide a natural hedge that helps smooth earnings volatility and supports premium valuation versus more narrowly focused peers.
• Stronger than expected results in Gathering and Processing and Logistics and Transportation, including robust volumes and frac margin strength, reinforce confidence in Targa’s ability to meet or exceed its EBITDA trajectory.
• Management’s expectation for ongoing Permian growth, with potential for low double digit inlet volume growth into 2026, underpins a visible multi year growth runway that supports higher long term cash flow estimates.
• Several firms view Targa as a high quality midstream name whose current valuation does not fully reflect global demand tailwinds for natural gas and NGL infrastructure, leaving room for multiple expansion if execution remains solid.

Bearish Takeaways

• Bearish analysts cite a softer macro backdrop and volatile commodity prices as key reasons for trimming price targets, suggesting more tempered upside as the cycle matures.
• There is growing focus on a shift away from growth for growth’s sake, with concerns that higher growth capex, if not carefully calibrated, could crowd out incremental buybacks or dividend increases that investors increasingly prioritize.
• Some caution that while diversification and scale are strengths, they also make Targa more exposed to broad energy market swings, which could pressure valuation multiples if macro conditions deteriorate further.
• Falling oil rig counts, particularly in key basins, are viewed as a risk to longer term volume growth assumptions, making sustained double digit volume growth more execution sensitive and dependent on continued commercial wins.

What's in the News

• Targa Resources issued full year 2025 earnings guidance, forecasting net income attributable to the company of approximately $1.825 billion (Corporate Guidance).
• The company outlined dividend guidance for 2026, intending to recommend a common dividend increase to $1.25 per share for the first quarter and $5.00 per share for the full year, subject to Board approval (Dividend Guidance).
• From July 1, 2025 to September 30, 2025, Targa completed a major tranche of its share repurchase program, buying back 3,538,285 shares, or about 1.63 percent of shares outstanding, for roughly $604.86 million under the August 1, 2024 authorization (Buyback Update).
• Targa announced the Speedway NGL Pipeline project, a 500 mile, 30 inch pipeline from the Permian Basin to Mont Belvieu with initial capacity of about 500 thousand barrels per day, expandable to 1,000 thousand barrels per day, at an estimated cost of $1.6 billion and a targeted in service date in the third quarter of 2027 (Business Expansion).
• To support continued Permian Delaware growth, Targa is moving forward with its next 275 million cubic feet per day gas processing facility, the Yeti plant. This facility is part of a broader buildout of five Permian plants totaling 1.4 billion cubic feet per day of inlet capacity expected online over the next two years (Business Expansion).

Valuation Changes

• Fair Value Estimate has risen slightly from approximately $208.00 to about $208.90 per share, reflecting a modest upward revision in intrinsic value.
• Discount Rate has fallen slightly from about 7.06 percent to roughly 7.02 percent, implying a marginally lower perceived risk profile or cost of capital.
• Revenue Growth remains effectively unchanged at around 6.84 percent, indicating no material shift in long term top line assumptions.
• Net Profit Margin is essentially flat at roughly 11.45 percent, suggesting stable expectations for future profitability.
• Future P/E has risen slightly from about 21.46x to approximately 21.53x, which points to a modestly higher multiple applied to forward earnings.