Targa Resources (TRGP) PT Lowered to $335 at Stifel Amid L&T Segment Operating Margin Decline

Stifel analyst Robert Hodges lowered the price target on Targa Resources (NYSE: TRGP) to $335.00 (from $340.00) while maintaining a Buy rating.

The analyst commented, "In 2Q, we saw a significant ~50% Y/Y increase in L&T operating margin driven by marketing opportunities and ~25% Y/Y increase in G&P operating margin, with slight uplift from the completion of the Midland East Driver plant. For 3Q, we expect to see higher growth in G&P segment, modeling its operating margin 2.7% above consensus at ~$765MM supported by stronger producer activity in the Permian. In the L&T segment, we see operating margin declining to ~$812MM, 0.7% below consensus on lower export volumes and incremental costs associated with NGL transport. We expect 3Q26 EBITDA of ~$1.6B, 0.9% above consensus, and model FY26 slightly above the high end of the ~$5.9B guide. Our 3Q26 growth capex estimate of ~$1.4B sits 5.1% above consensus as we see heavier spending needed to support the cadence of expansion projects. Accordingly, we model FY26 growth capex at the top of the guided range at ~$5B, ~2.8% above consensus. We maintain our Buy rating and lower our target price to $335, which is 75% comprised of our DCF model with an 8% WACC and 25% our SOTP analysis that blends to ~13.5x 2027E EBITDA."

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