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Texas Firm Represents 'Inexpensive Way to Buy Integration in Midstream'

Streetwise Reports
0 Comments|September 9, 2019

The reasons this energy firm warrants a rerating are discussed in a Raymond James report.

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In an Aug. 28 research note, analyst J.R. Weston reported that Raymond James upgraded Targa Resources Corp. (TRGP:NYSE) to Strong Buy from Outperform "as we feel this is an attractive entry point to gain exposure to the longer-term theme; the selloff is overdone."

That theme, Weston explained, is "meaningfully improved" financial flexibility in 2020 and beyond for this midstream energy corporation now that capex has "dialed down" and cash flow is increasing. "The worst is largely behind the company," and now, it is on the cusp of "reaping the rewards of a long-running and ambitious growth program."

That program involved Targa integrating business and enhancing downstream assets to strengthen its long-term strategic position, noted Weston. "With Grand Prix online this month and expected to ramp to 200,000 barrels per day September, Targa has connected the natural gas liquids value chain between its Permian/Midcon assets and top-tier downstream footprint."

Targa "is poised to rate into a group of midstream players that are perceived to be higher quality," Weston commented, and as the company nears full integration, "we expect that investors become willing to provide it with a substantial premium valuation, closer to large-cap C corps."

Raymond James' target price on Targa remains unchanged at $48 per share. This compares to $36.78, where the stock is currently trading.

 

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Raymond James, Targa Resources Corp., August 28, 2019

ANALYST INFORMATION

Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The analysts J.R. Weston and Justin Jenkins, primarily responsible for the preparation of this research report, attest to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and that no part of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.

RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James & Associates, Inc. makes a market in the shares of Targa Resources Corp.
Raymond James & Associates received non-securities related compensation from Targa Resources Corp. within the past 12 months.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available here.

 


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