Key Moments
- Wells Fargo reiterated its “overweight” rating and $25 price target on Energy Transfer, implying a 28.7% upside from the latest $19.43 close.
- The brokerage raised its 2026 and 2027 EBITDA projections to $20.04 billion and $19.7 billion, respectively, citing organic growth and the Vaquero acquisition.
- Analysts highlighted $680 million in organic project benefits and $310 million from Vaquero, partially offset by several earnings headwinds.
Wells Fargo’s View on Energy Transfer
Investing.com– Wells Fargo reiterated its “overweight” recommendation on Energy Transfer and kept its $25 price objective on the units of the U.S. midstream master limited partnership, pointing to robust organic pipeline expansion as the key reason it remains one of the bank’s preferred names in the space.
Units of Energy Transfer most recently finished trading at $19.43 on Tuesday. Based on that closing level, the firm’s target price signaled potential upside of 28.7%. The units were carrying a dividend yield of 7.2%.
Revised EBITDA Outlook and Key Drivers
The firm increased its 2027 EBITDA estimates for Energy Transfer, emphasizing that the acquisition of Vaquero, along with stronger commodity prices, supported a constructive outlook. According to Wells Fargo, the updated 2027 projection was roughly in line with the midpoint of the company’s existing 2026 EBITDA guidance of $19.8 billion.
In its updated model, Wells Fargo now expects 2026 EBITDA of $20.04 billion, up from its prior view of $19.24 billion. For 2027, the bank lifted its estimate to $19.7 billion from $19.0 billion.
Breakdown of Growth Contributions and Headwinds
Analysts at Wells Fargo said they continued to regard Energy Transfer as a top choice among energy partnerships. They pointed to anticipated contributions of about $680 million from organic growth projects led by Hugh Brinson and approximately $310 million from the Vaquero transaction.
The note also detailed several offsetting factors. The bank cited around $850 million of headwinds tied to a normalization in commodity and optimization earnings, $420 million related to one-time items rolling off, and $100 million associated with NGL recontracting.
Wells Fargo said its own EBITDA estimate stood about $200 million above that bridge, reflecting higher assumed refining margins at Sunoco.
| Metric | Previous Estimate | Revised Estimate |
|---|---|---|
| 2026 EBITDA | $19.24 billion | $20.04 billion |
| 2027 EBITDA | $19.0 billion | $19.7 billion |
| Company 2026 guidance midpoint | $19.8 billion | |
Pipeline Expansion and South Mississippi Project
Wells Fargo’s report also focused on Energy Transfer’s pipeline expansion initiatives. The bank noted that a South Mississippi pipeline project could position the company for a Phase 10 expansion of Florida Gas Transmission.
The note described this South Mississippi project as a 215-mile line with capacity of 1.2 billion cubic feet per day, originating near the Perryville hub and providing shippers in the Southeast with access to supply from the Permian and Haynesville regions.
According to the report, Energy Transfer’s management indicated that Phase 9 of the expansion was in progress and that it was already engaged in discussions with customers regarding a potential Phase 10.
Strategic Positioning and Future Opportunities
Wells Fargo said its rating on Energy Transfer also reflected potential opportunities tied to data center-related demand in Texas and the possibility of accelerating EBITDA growth as capital deployment increasingly targets high-return natural gas projects.
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