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Targa Resources Corp TRGP

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Morningstar’s Analysis

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Economic Moat


Capital Allocation


Targa's Third Quarter Is Solid, but Leverage Remains High Amid Capital Allocation Concerns

Stephen Ellis Sector Strategist

Analyst Note

| Stephen Ellis |

Targa reported a solid third quarter in our view, as EBITDA improved 19% sequentially to $419 million. Gathering and processing volumes recovered as producers ended curtailments, while LPG export volumes hit a record 9.5 million barrels per month, up 22% sequentially. After updating our model, our fair value estimate of $19.50 and no-moat rating remain unchanged. We are concerned by Targa's capital allocation priorities, though. 

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Company Profile

Business Description

Targa Resources is a midstream firm that primarily operates gathering and processing assets with substantial positions in the Permian, Stack, Scoop, and Bakken plays. It has over 850 bbl/d of net fractionation capacity and operates an LPG export terminal. The Grand Prix natural gas liquids pipeline also recently entered full service.

811 Louisiana Street, Suite 2100
Houston, TX, 77002
T +1 713 584-1000
Sector Energy
Industry Oil & Gas Midstream
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 2,680