Targa Resources Corp
TRGP: XNYS (USA)
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
$58.00 | Vwp | Yxkwzhbv |
Fee Floors Support Substantial Fair Value Estimate Increase for Targa
Business Strategy and Outlook
Targa Resources is primarily a gatherer and processor of natural gas. Seventy percent of its gathering and processing, or G&P, assets are in the Permian, which generates about 80% of its volumes. The firm has historically outgrown Permian production growth, given its leverage to growth-oriented customers and robust gas/oil ratios. It has aggressively made acquisitions, with Lucid in 2022 for $3.5 billion its biggest deal yet. To date, it has contributed to very healthy near-term growth. Fee floors provided protection for Targa downside for 10 out of 12 months in 2023, and we expect a similar outcome for 2024 given the delay in LNG projects and demand uplift.