Plains All American stock price target raised to $20 by Citi

Investing.com - Citi has raised its price target on Plains All American (NASDAQ:PAA) to $20.00 from $18.00 while maintaining a Neutral rating on the stock. Currently trading at $18.62 with a market cap of $13.1 billion, InvestingPro analysis suggests the stock is slightly undervalued based on its proprietary Fair Value model.

The investment bank expects Plains All American to report second-quarter 2025 adjusted EBITDA of $672 million, which aligns with the Street consensus of $671 million. For context, the company’s last twelve months EBITDA stands at $2.87 billion. Citi anticipates sequentially lower EBITDA for the quarter, primarily due to seasonally lower NGL results.

Higher Crude EBITDA is expected to partially offset the decline, driven by volume growth from increased refinery utilization and improved weather conditions. Recent acquisitions including Black Knight (BMV:BKIN), Ironwood, and Midway are projected to contribute approximately $10-15 million in additional earnings.

Citi notes that lower crude prices and narrower spreads likely created headwinds during the quarter, though hedging strategies may have reduced the impact. The firm expects Plains All American to reiterate its guidance, having already indicated it would target the lower half of its range last quarter due to a weaker macro environment.

The research note suggests Plains All American will continue pursuing bolt-on acquisitions, a strategy unlikely to change ahead of the planned NGL asset sale closing next year. Citi also anticipates potential segment reporting adjustments this quarter related to accounting preparations for the upcoming asset sale. With an overall Financial Health score of "GOOD" according to InvestingPro, which offers comprehensive analysis and 12+ additional ProTips about PAA’s growth prospects and financial stability, the company appears well-positioned to execute its strategy.

In other recent news, Plains All American has reported significant developments affecting its operations and strategic direction. The company announced robust first-quarter 2025 financial results with an adjusted EBITDA of $754 million, showcasing resilience despite challenges like winter weather and unexpected refinery downtimes. Additionally, Plains All American is set to divest most of its Canadian NGL business to Keyera Corp (TSX:KEY). for approximately $3.75 billion USD, a move expected to close in the first quarter of 2026. This transaction is anticipated to simplify operations and improve cash flow conversion, according to Stifel, which maintained its Buy rating on the stock with a $23.00 price target.

UBS also reiterated its Buy rating on Plains All American, highlighting the recently announced sale of Canadian NGL assets. The firm noted that the asset sale will reduce maintenance capital expenditures by 30% and decrease the company’s commodity exposure from 20% to 15%. UBS projects that proceeds from the sale could be used to eliminate preferred shares, potentially saving $215-220 million in interest expense.

Conversely, Goldman Sachs adjusted its price target for Plains All American to $18, retaining a Sell rating. This follows the company’s first-quarter earnings, which surpassed expectations due to stronger NGL margins. Despite these results, Goldman Sachs expressed caution, citing potential downside risks to EBITDA projections amid ongoing commodity price fluctuations. Plains All American’s strategic focus remains on expanding infrastructure and pursuing bolt-on acquisitions, with UBS and Stifel both acknowledging the company’s continued efforts in this area.

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