Jefferies Raises Price Target for Energy Transfer (NYSE:ET) on Strong Q3 Performance

Jefferies maintains its Buy rating on Energy Transfer (NYSE:ET) and raises its price target to $25.00. The stock trades at $20.25 when the update is posted, putting the target $4.75, or about 23%, above that price. Energy Transfer operates pipelines and storage facilities that move oil, natural gas, and other energy products.

The rating follows a strong third quarter. Energy Transfer reports adjusted EBITDA of $5.00 billion, up 31% from a year earlier, as highlighted by The Motley Fool. Adjusted EBITDA is a measure of operating earnings that leaves out certain costs, including interest and depreciation. Growth in natural gas transportation helps drive the increase.

Energy Transfer also reports distributable cash flow of $2.50 billion, up 33% year over year, as highlighted by The Motley Fool. This is cash available to pay investors after key operating and financing costs. It covers the distribution by more than two times, while the stock yields 6.70% at the time of the report.

Energy Transfer raises its quarterly distribution to $0.34 per unit and targets annual distribution growth of 3% to 5%, as highlighted by Seeking Alpha. Its payout ratio remains below 50%, meaning less than half of its distributable cash flow goes toward distributions.

The company raises its full-year adjusted EBITDA outlook by $850.00 million, or about 4.50% at the midpoint, as highlighted by The Motley Fool. Intrastate transportation and storage EBITDA rises 50% to $346.00 million. Energy Transfer also plans to increase infrastructure spending next year to serve rising energy demand.