Scotiabank raises target
Scotiabank raised its 12-month price target for Targa Resources Corp. (NYSE:TRGP) to $246 from $224 and reaffirmed a Sector Outperform rating. The bank's note comes as TRGP shares trade at $231.87, up 26% year-to-date and approaching a 52-week high of $233.28, reflecting momentum across the midstream sector.
Drivers cited by the analyst
The research team pointed to a set of positive midstream earnings updates over the past week that have shifted both near-term and longer-term expectations to a more constructive stance compared with the outlook Scotiabank had at the end of 2025. Central to the upgrade is a focus on natural gas and a range of end-use demand drivers - from LNG exports to power generation and international flows - that underpin midstream utilization and project economics.
Company growth plans and capacity additions
Targa has announced another new plant and provided an illustrative capital expenditure and cash flow profile that contemplates an increase in the pace of additions. The company outlined a cadence of three plants per year versus roughly two previously, equating to about 825 million cubic feet per day of new capacity. Scotiabank emphasized the Permian Basin's role as a key source of gas supply necessary to meet that demand.
Peer activity and industry capex
Energy Transfer has also signaled an industry tilt toward gas-driven projects, indicating it expects to allocate around two-thirds of fiscal 2026 capital expenditure to initiatives tied to natural gas - including processing capacity and demand-pull pipelines. Scotiabank highlights ongoing Permian gas growth as a continuing theme for midstream investment and project activity.
Market and earnings context
Scotiabank noted crude prices averaged in the low $60s for fiscal 2026 through 2029 as of Feb. 20, 2026, a backdrop that the bank said could generate upside surprises to the outlook. Separately, Targa reported fourth-quarter 2025 results that slightly missed consensus: earnings per share of $2.29 versus a $2.32 forecast, and revenue of $4.06 billion against an expected $4.07 billion.
Analyst reactions
Despite the modest miss, several firms expressed constructive views. Stifel raised its price target to $243 from $213 and maintained a Buy rating, while BMO Capital increased its target to $241 from $205, both citing Targa's strong position in the Permian and expectations for continued basin growth in 2026 and beyond.
Valuation note
InvestingPro analysis flagged TRGP as appearing overvalued relative to its Fair Value estimate. This assessment is noted alongside the price-target changes and company guidance, providing investors with a valuation perspective that contrasts with the recent analyst optimism.
Bottom line
Analyst upgrades and company capacity plans underscore a bullish midstream narrative centered on natural gas and Permian growth, even as fourth-quarter results slightly trailed expectations and valuation signals warrant attention.