Base60%
Price target
$177.99
-34.2% from spot
In the base scenario, Targa delivers on its multi-year capital expansion program, adding five Permian processing plants and expanding Mont Belvieu fractionation capacity in line with guided schedules,. Full-year 2026 adjusted EBITDA tracks toward the upper end of the $5.7B to $5.9B guidance range, while revenue grows to $18,955.9M in FY2026 and $23,812.4M in FY2027 as project capacity enters service. Operating margin normalizes from 21.0% toward 19.0% over the five-year forecast horizon as $250M of temporary marketing optimization margin from 1H 2026 dissipates and commodity pass-through revenues expand. Reinvestment demands remain elevated relative to NOPAT in FY2026 before tapering toward steady-state levels by FY2030, allowing free cash flow to expand toward steady-state levels while servicing $19,577,999,360 in total debt.
- Revenue expands 11.32% in FY2026 to $18,955.9M and 25.62% in FY2027 to $23,812.4M,
- Operating margin starts at 21.0% in FY2026 and normalizes gradually to 19.0% by FY2030, reflecting the phase-out of $250M in non-recurring marketing gains
- FY2026 capital expenditure deploys guided $4.5B net growth capex and $250M maintenance capex
- Reinvestment rate steps down substantially after peak growth capex in FY2026, transitioning toward steady-state maintenance levels by the terminal year
- WACC of 7.57% and moderate Ke of 8.40%
Bull20%
Price target
$237.82
-12.0% from spot
In the bull scenario, robust international demand for U.S. natural gas liquids drives accelerated commercial contracting across Targa's Mont Belvieu fractionation and Galena Park export docks. Active producer drilling in the Permian basin fills newly commissioned processing plants (including East Pembrook and subsequent Midland additions), driving consolidated revenue beyond consensus expectations to exceed $18,955.9M in FY2026 and $23,811.5M in FY2027. Low-cost pump additions on the Speedway Pipeline double throughput from 500,000 to 1,000,000 barrels per day, expanding operating leverage and sustaining operating margins at 21.0%. As major growth capital projects commission by late 2026, capital expenditures taper rapidly toward the guided maintenance level of $250M, triggering an inflection in annual free cash flow that funds significant dividend increases and opportunistic share repurchases.
- Permian associated gas and NGL volume growth accelerates above historical double-digit rates
- Train 11, Train 12, Train 13, and Galena Park LPG export expansions ramp ahead of schedule
- Speedway Pipeline capacity doubles efficiently from 500,000 to 1,000,000 bpd via pump additions
- FY2026-FY2027 revenues exceed consensus targets of $18,955.9M and $23,811.5M
- Operating margins sustain at or above 21.0% with capital expenditures normalizing rapidly toward maintenance capex of $250M post-2026
