On Tuesday, Truist Securities revised its price target for Targa Resources (NYSE:TRGP), a company operating in the midstream energy sector, increasing it to $120 from the previous $105 while reiterating a Buy rating on the stock. The adjustment reflects the analyst's expectation for the company's growth to continue and potentially accelerate in the upcoming year.
The positive outlook is based on a mix of board-approved projects and others that are expected to receive approval shortly. These initiatives, alongside robust organic activity in the Permian Basin, are anticipated to significantly enhance Targa's free cash flow (FCF). Estimates suggest an increase in FCF by up to $1 billion next year compared to the projected $500 million-plus in 2023.
The substantial increase in FCF is projected to support ongoing dividend growth. Targa Resources has already been recommended to boost its dividend by 50% this year. The company's strong financial position is also seen as an opportunity to pursue further accretive transactions that could contribute to its growth trajectory.
The analyst's statement highlighted the dual impact of both external and internal activities in driving the company's financial performance. "We estimate the external and internal activity to materially boost FCF by as much as $1B next year versus 2023," the analyst noted, underscoring the potential for significant financial improvements.
Targa Resources' strategic moves and financial planning are geared towards sustaining and enhancing shareholder value, as evidenced by the planned increase in dividends and the pursuit of growth opportunities. The revised price target from Truist Securities signals a confidence in Targa's ability to execute its growth strategy and deliver on its financial objectives.
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