Gauging the outlook for Plains All American Pipeline
In its third quarter 2015 conference call, Plains All American Pipeline (PAA) did not provide guidance for 2016. It generally provides shadow guidance for the next year in its third quarter call.
Greg Armstrong, Chairman and CEO of Plains All American, said during the 3Q15 conference call that “for 2016 we do not feel like we have sufficient clarity as to how much producers are going to spend or how they are going to allocate capital among regions.” Plains All American intends to provide guidance for 2016 in its upcoming conference call in February. However, it already expects its 2016 capital program to be around 25%–30% lower than its 2015 capital program of $2.2 billion.
Plains All American had earlier reduced its targeted distribution growth for 2015 to 6% from the original target of 7% in its 2Q15 earnings announcement. Additionally, it talked about the possibility of a “much lower” or zero distribution growth in 2016. The company announced a flat 4Q15 per unit distribution compared to 3Q15 on January 12, 2016.
PAA makes up ~8% of the Alerian MLP ETF (AMLP), an ETF of top energy MLPs (master limited partnerships).
Latest price targets for Plains All American
The median target price for PAA in one year provided by the analysts surveyed by Bloomberg was $32 as of January 15, 2016. The low and high target price for the stock over the same period was $20 and $62, respectively. The median target price implies a 55% price return in a year from PAA’s current price of $20.7.
About 46% of the analysts surveyed have rated Plains All American a “buy,” while 50% have rated it a “hold,” and 4% have rated it a “sell.”
As for other midstream companies, 50% rated Spectra Energy Corporation (SE) a “buy,” and 50% rated Enbridge Energy Partners (EEP) a “buy.” About 25% of the analysts surveyed rated ONEOK (OKE) a “buy.”
Now let’s begin looking at Plains All American’s individual segments.