UBS Cuts Price Target on Targa Resources (TRGP) Following a Stress Test and Guidance Update

UBS maintained a Buy rating on Targa Resources (NYSE: TRGP), and cut the price target to $78.00 (from $84.00), after the company stress tested its business and announced 2016 guidance.

Analyst Shneur Gershuni commented, "Targa stress tested its business and announced 2016 guidance, providing more visibility into 2016. NGLS guided 2016 DPU of $3.30 (flat from 2Q15 annualized) and 2016 coverage of 0.90-0.95x. Mgmt noted that assuming recent 2016 strip (WTI: $47, NGL: $0.45, NG: $2.85), coverage would be lower by roughly 0.05x. TRGP guided 2017 DPU growth of 15% YOY and 2016 coverage of ~1.0x. For summary table of 2016 outlook please see Figure 1 on page 2. Overall 2016 outlook was below UBSe, but we note that Targa usually provides a conservative outlook. NGLS also announced that 3Q15 coverage will be roughly 1.0x-1.1x above UBSe vs. 2015 outlook of ~1.0x. We believe that stronger than expected LPG export volumes and strong Field G&P inlet volumes from the Permian will drive strong 3Q15 results."

For an analyst ratings summary and ratings history on Targa Resources click here. For more ratings news on Targa Resources click here.

Shares of Targa Resources closed at $60.51 yesterday.

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