Wells Fargo Taps Plains All American, Targa Resources as Top Midstream Picks Ahead of Q2 Earnings

Wells Fargo has released its second-quarter 2026 earnings preview for the midstream energy sector, projecting a largely positive reporting season. The bank identified Plains All American Pipeline (PAA) and Targa Resources (TRGP) as its favored stocks heading into the earnings period, while recommending investors avoid Williams Companies (WMB).

Sector Outlook and Key Calls

In a note to clients, Wells Fargo expressed optimism for the sector's overall performance. The bank's analysts believe Plains All American is likely tracking above the midpoint of its guidance, citing gas pipeline capacity improvements that are materializing sooner than anticipated.

Similarly, Targa Resources is also expected to potentially exceed its guidance midpoint. This is attributed to the return of curtailed volumes and the possibility that liquefied petroleum gas (LPG) volumes at its Galena Park facility reached a record high in June. The firm also noted Targa could benefit from higher volumes and favorable Katy-Waha spreads.

Expected Winners and Losers

Wells Fargo identified several companies poised to either exceed or fall short of consensus earnings estimates for the second quarter. The bank's analysis suggests a clear divergence in performance based on operational factors and market conditions.

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• Potential to Beat Estimates:
• Cheniere Energy (LNG): Expected to benefit from higher international spreads, increased volumes, and lower operating costs due to a lighter maintenance schedule.
• ONEOK (OKE): May see a boost from wide Katy-Waha marketing spreads during the quarter.
• Sunoco (SUN): Could report a significantly higher refinery contribution driven by elevated crack spreads.
• Targa Resources (TRGP) and Viper Energy Partners (VG) were also named as likely to outperform.
• Potential to Miss Estimates:
• Keyera (KEY): A change in the accounting treatment of marketing profits from its Plains All American acquisition is expected to shift some Q2 profit into Q4.
• MPLX (MPLX): Faces a high bar for consensus EBITDA expectations with limited new projects coming into service during the quarter.

Company-Specific Catalysts and Headwinds

Beyond broad market trends, Wells Fargo highlighted specific events that could impact individual company results. Antero Midstream (AM) could see a significant financial benefit, with the potential to receive over $300 million in after-tax proceeds following a favorable Colorado Supreme Court ruling in the Veolia case on June 23.

Conversely, the bank pointed to a potential headwind for Kinder Morgan (KMI). With $500 million to $600 million worth of projects entering service in Q2, the company faces a high bar to sustain its backlog growth, a key metric for investors.