Goldman Upgrades Plains All American To Buy, Targets 20% Upside
1h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
plains-all-americanpipeline-stocks
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Goldman Sachs announced on 4 June 2026 that it upgraded its rating on Plains All American Pipeline, L.P. (PAA) from Neutral to Buy. The investment bank set a new 12-month price target of $22, representing approximately 20% upside from the stock's closing price of $18.30 on the prior trading day. The upgrade is grounded in an assessment of improving, albeit measured, financial and operational growth prospects for the US midstream operator.
The US midstream sector is entering a period of sustained, moderate capital investment. The last time Goldman issued a comparable upgrade on a large-cap pipeline operator was its move on Enterprise Products Partners (EPD) to Buy in November 2023, which preceded a 15% total return over the following six months. The current macro backdrop features the 10-year Treasury yield at 4.2% and West Texas Intermediate crude oil stabilizing above $78 per barrel, providing a stable foundation for energy infrastructure valuations. The catalyst for this re-rating is a multi-quarter trend of volume growth across PAA's Permian Basin systems, coupled with the company's successful deleveraging. Its debt-to-EBITDA ratio fell below 4.0x in Q1 2026, crossing a key threshold that reduces financing risk and frees cash flow for shareholder returns.
Plains All American's enterprise value stands at $26.5 billion. The company's distributable cash flow for fiscal year 2025 was $2.1 billion, supporting its current annualized distribution of $1.07 per unit, a yield of 5.8%. Goldman's $22 price target implies a forward EV/EBITDA multiple of 9.5x, up from its current trading multiple of 8.7x but still below the 10.2x average of its pure-play Permian peer group. For comparison, the Alerian MLP Index (AMZ) has returned 8% year-to-date, while PAA had returned 5% prior to the upgrade call. The firm's projected volume growth for 2026 is 3-5% across its core systems, a tangible acceleration from the 1-2% growth witnessed in 2024.
| Metric | Pre-Upgrade View | Goldman's New Target |
|---|---|---|
| Rating | Neutral | Buy |
| Price Target | Not Disclosed | $22 |
| Implied Upside | N/A | ~20% |
The upgrade signals renewed institutional confidence in select midstream names with direct exposure to the Permian Basin's long-term production profile. Second-order beneficiaries include pipeline operators with similar basin footprints, such as Kinder Morgan (KMI) and Targa Resources (TRGP), which may see positive read-throughs in their valuations. A quantified estimate suggests the upgrade could catalyze a sector-wide re-rating of 2-3% for Permian-focused midstream equities over the next quarter. The primary counter-argument is that any significant downturn in crude oil prices below $70 would pressure producer budgets and subsequently pipeline volumes, capping near-term growth. Positioning data indicates hedge funds had been net short the midstream sector for three consecutive weeks prior to this report. The upgrade likely triggers short covering in PAA and could redirect institutional flow into the broader energy infrastructure ETF (AMLP).
The next major catalyst for Plains All American is its Q2 2026 earnings report, scheduled for 5 August 2026. Investors will scrutinize volume figures and guidance for confirmation of the growth trajectory Goldman outlined. The FOMC meeting on 29 July 2026 is also critical, as interest rate decisions impact the sector's cost of capital and relative yield appeal. Key technical levels to monitor include the $19.50 resistance level, a breach of which would confirm bullish momentum, and the 200-day moving average near $17.80, which should act as strong support. If the company announces a distribution increase alongside its Q2 earnings, the stock could test the $23 level. A failure to meet volume growth targets, however, would see the stock retreat toward the $17 support zone.
The upgrade is based on improved free cash flow stability, which directly supports the sustainability of PAA's distribution. Goldman's analysis points to a covered distribution with a payout ratio below 85% of distributable cash flow. This financial strength makes a distribution cut highly unlikely in the next 12-18 months and could allow for a modest increase in 2027 if volume growth meets targets.
PAA is currently trading at an EV/EBITDA multiple of 8.7x. This is below its 5-year historical average of 9.3x and significantly below its pre-pandemic 10-year average of 11.2x. Goldman's target multiple of 9.5x is not a stretch to historical norms, suggesting the re-rating potential is based on fundamentals rather than speculative euphoria.
The two primary risks are a sustained drop in crude oil prices, which would reduce drilling and pipeline utilization, and regulatory challenges for new pipeline construction. A change in federal energy policy following the 2028 US election could delay or cancel key infrastructure projects, though existing assets like PAA's vast network are largely insulated from this greenfield risk.
Goldman Sachs sees a clear path for Plains All American stock to rise 20% on the back of durable, cash-generative volume growth.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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