Analyst Note
| Stephen Ellis |Targa's focus on debt reduction during the first quarter and freeing up cash to do so will likely be an ongoing focus for the rest of the year. The firm offered a 2020 EBITDA range of $1.4 billion to $1.625 billion, and our estimate sits at the low end of the range at $1.4 billion as we remain concerned about lower levels of drilling activity and stressed producers. Targa's exposure to weaker customers is greater than peers, as it disclosed that about half its revenue by our estimates is from investment-grade or letter of credit backed customers. This is far lower than peers, which tend to be around 75%-85% investment-grade or letter of credit backed. We plan to maintain our $13 fair value estimate and reiterate our extreme uncertainty rating.