Bank of America Securities analyst Jean Ann Salisbury has maintained their neutral stance on PAA stock, giving a Hold rating on August 29.
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Jean Ann Salisbury’s rating is based on the recent acquisition by Plains All American (PAA) of a 55% stake in the EPIC Crude pipeline, which is valued at approximately $1.57 billion. This acquisition implies a valuation of $2.8 billion for EPIC and a multiple of around 9x EBITDA, which is considered reasonable. However, the deal also involves a potential earnout payment and adds to PAA’s existing debt, raising concerns about the impact on cash available for shareholders.
Additionally, while there is potential for expansion of the EPIC pipeline, the current spare capacity in the Permian Basin suggests that PAA may need to offer competitive pricing, which could pressure existing rates. This situation, combined with uncertainty in medium-term oil growth in the Permian, contributes to a neutral outlook. Therefore, Salisbury maintains a Hold rating, reflecting a balanced view of the potential benefits and risks associated with the acquisition.
In another report released on August 29, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $19.50 price target.