Overview
Wells Fargo has held its overweight recommendation and a $25 price target on Energy Transfer, keeping the U.S. midstream company among its highest-conviction names in the energy partnerships space. The brokerage emphasized that sustained organic growth in pipeline projects, together with the acquisition of Vaquero and firmer commodity prices, underpin a constructive earnings outlook.
Market snapshot
Publicly traded units of the master limited partnership closed at $19.43 on Tuesday. The $25 price target implies an upside of roughly 28.7% versus that closing price. At the time of the note, the units carried a dividend yield of 7.2%.
Updated EBITDA outlook
Wells Fargo moved higher its expectations for Energy Transfer's near-term earnings. The brokerage raised its 2026 EBITDA estimate to $20.04 billion from $19.24 billion and its 2027 forecast to $19.7 billion from $19.0 billion. The firm indicated that its 2027 forecast sits near the midpoint of the company's own 2026 guidance of $19.8 billion.
Drivers of the upgrade
Analysts at Wells Fargo flagged roughly $680 million of contribution from organic projects led by Hugh Brinson and about $310 million of incremental EBITDA tied to the Vaquero acquisition as central to the more bullish stance. The brokerage also noted that stronger commodity prices contributed to the improved outlook.
Offsetting headwinds
Wells Fargo noted several offsets to the positive contributors. Those included approximately $850 million related to the normalization of commodity and optimization earnings, $420 million from one-time items that will roll off, and about $100 million linked to NGL recontracting. Overall, the brokerage's own estimate remained roughly $200 million above that bridge, driven in part by higher assumed refining margins at Sunoco.
Capital projects and expansion potential
The note described a proposed South Mississippi pipeline - a 215-mile, 1.2 billion cubic feet per day line that would run from near the Perryville hub and give Southeast shippers access to Permian and Haynesville supply. Wells Fargo said such a project could set the stage for a Phase 10 expansion of Florida Gas Transmission. Management reported that Phase 9 is already underway and that discussions with customers about Phase 10 have begun.
Additional strategic considerations
Wells Fargo also cited potential upside from data center opportunities in Texas and the possibility that a reallocation of capital spending toward high-return gas projects could accelerate EBITDA growth. These factors were part of the rationale for maintaining Energy Transfer as a top pick among energy partnerships.
Market reaction and related names
The brokerage pointed to higher refining margins at Sunoco as a factor contributing to its estimates, reflecting interconnected dynamics across midstream and refining assets. The note discussed how changes across commodity markets and contract dynamics can affect midstream partnership earnings and how Energy Transfer's project pipeline plays into that sensitivity.
Note on content
The coverage summarizes Wells Fargo's published views and the company's disclosures referenced in the analyst note, including management commentary on project phases and the firm's updated EBITDA forecasts.