WFS---- Key Takeaways. Q2 EBITDA beat. Targa increased the low end of its 2020 EBITDA guidance to $1,500-1,625MM (midpoint of $1,563MM) from $1,400-1,625MM from (midpoint of $1,513MM) based on H1’20 results and assuming recent commodity prices remain essentially unchanged for the balance of the year (i.e. crude, NGL, Henry Hub gas, and Waha gas prices of $40/Bbl, $0.40/g, $2/MMBtu, and $1.50/MMBtu, respectively.
We are increasing our 2020 and 2021 DCF/share estimates to $4.09 and $3.75, respectively, from $3.67 and $3.38 primarily to reflect Q2 results, and higher Field G&P, Grand Prix, and fractionation volumes. We are increasing our price target to $20/share from $18/share primarily to reflect a higher EBITDA forecast. We maintain our Equal Weight rating as Targa’s improved outlook is mostly reflected in the current valuation, in our view
Q2 Beat. Adjusted EBITDA of $351.2MM was above our estimate of $330.6MM and in line with consensus of $350.9MM. The EBITDA variance relates mostly to stronger Gathering & Processing contributions (volumes), lower G&A expenses, and higher distributions from equity investments, partially offset by lower Logistics & Transportation (LPG exports) results.