Houston, Texas-based Targa Resources Corp. (TRGP) is a midstream energy infrastructure company that owns, operates, acquires, and develops a diversified portfolio of natural gas, natural gas liquids (NGLs), and crude oil infrastructure. Valued at a market cap of $37.2 billion, the company operates across major U.S. shale basins, including the Permian, Eagle Ford, Bakken, Barnett, and Anadarko formations.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and TRGP fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the oil & gas midstream industry. The company's vertically integrated asset base allows it to control the entire midstream value chain, enhancing operational efficiency and profitability. Additionally, its diverse customer base, long-term fee-based contracts, and exposure to rising U.S. energy production provide stable cash flows and reduce commodity price risk.
This energy infrastructure company has dipped 21.5% from its 52-week high of $218.51, reached on Jan. 22. Shares of TRGP have declined 9.9% over the past three months, considerably underperforming the S&P 500 Index’s ($SPX) 7% return during the same time frame.
Moreover, on a YTD basis, shares of TRGP are down 3.9%, lagging behind SPX’s 2.6% rise. Nonetheless, in the longer term, TRGP has rallied 44.1% over the past 52 weeks, outpacing SPX’s 11.1% uptick over the same time frame.
To confirm its recent bearish trend, TRGP has been trading below its 200-day moving average since early April, with slight fluctuations. However, it has recently started trading above its 50-day moving average.
On May 1, shares of TRGP plunged 5% after its Q1 earnings release. Due to lower commodities sales, the company’s overall revenue decreased marginally year-over-year to $4.6 billion and fell short of the consensus estimates. However, on the earnings front, its adjusted EBITDA improved 22% year-over-year to a Q1 record of $1.2 billion. Moreover, its adjusted cash flow from operations advanced 31.4% from the year-ago quarter to $970 million, while its adjusted free cash flow increased significantly from the same period last year, reaching $328.2 million. The company reaffirmed its fiscal 2025 adjusted EBITDA guidance of $4.7 billion to $4.9 billion.
TRGP has outperformed its rival, Enterprise Products Partners L.P.’s (EPD), 11.3% gain over the past 52 weeks. However, it has lagged behind EPD’s marginal uptick on a YTD basis.
Despite TRGP’s recent underperformance, analysts remain highly optimistic about its prospects. The stock has a consensus rating of "Strong Buy” from the 18 analysts covering it, and the mean price target of $205.37 suggests a 19.7% premium to its current price 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 solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
