On Tuesday, RBC Capital Markets adjusted its price target for Plains All American (NASDAQ:PAA) shares, a midstream energy company, increasing it to $18 from the previous $17. The firm has kept its Sector Perform rating on the stock.
Plains All American recently reported its first-quarter 2024 Adjusted EBITDA, which surpassed both RBC Capital's and the consensus estimates. The company also confirmed that it is maintaining its financial guidance for the year 2024.
A key factor influencing RBC Capital's revised price target is Plains All American's progress in re-contracting efforts. According to the firm, these efforts are expected to address concerns regarding cash flows within the crude oil segment for the year 2026.
RBC Capital noted that the company's year-to-date performance suggests the potential for an upward revision to its 2024 guidance later in the year. This anticipation stems from the solid results Plains All American has demonstrated so far.
The analyst from RBC Capital stated, "PAA reported solid results, but, we believe more importantly, provided an update on its re-contracting efforts that should alleviate concerns around cash flows in the crude oil segment in 2026.
PAA reported 1Q24 Adjusted EBITDA that exceeded our and consensus expectations and maintained its 2024 guidance. GivenYTD trends, we would not be surprised to see a guidance increase later in the year. We maintain our Sector Perform rating but increase our price target to $18 (from $17)."
InvestingPro Insights
Following the positive assessment by RBC Capital Markets, current metrics from InvestingPro further illuminate the financial landscape for Plains All American (NASDAQ:PAA). With a market capitalization of $12.16 billion, the company's valuation is reflected in a Price/Earnings (P/E) ratio of 14.87, which adjusts slightly higher to 15.12 when looking at the last twelve months as of Q1 2024. Despite a revenue contraction of 13.62% over the same period, Plains All American maintains a healthy dividend yield of 7.32%, showcasing a robust 18.69% growth in dividends. This could signal confidence in the company's ability to generate cash flow and reward shareholders.
Investors tracking Plains All American's performance will note the company's share price resilience, with a 47.73% one-year price total return, and it currently trades at 91.17% of its 52-week high. The company's stock price, closing at $17.35, is approaching the fair value estimates of $19 as per analyst targets, while InvestingPro's fair value calculation stands slightly lower at $17.2.
For those seeking a deeper dive into Plains All American's financials and future outlook, InvestingPro offers additional insights. There are 15 more InvestingPro Tips available that could further guide investment decisions. As a special offer, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of expert analysis and real-time data.
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