Targa Earnings: Targa Preps for 2025 Inflection Point on Free Cash Flow

Targa's fourth-quarter earnings and 2024 guidance were a bit lower than our expectations, primarily as lower oil, gas, and natural gas liquids pricing is trimming opportunities. However, similar to peer Energy Transfer, which is also materially weighted toward natural gas liquids, we expect that as 2024 progresses, Targa will capture incremental marketing opportunities, boosting earnings. Initially, we expect to leave our $79 fair value estimate unchanged, as well as our no-moat rating.