UPDATE: Bank of America Merrill Lynch Reiterates Buy Rating, Raises PT on Plains All American Pipeline LP
In a report published Wednesday, Bank of America Merrill Lynch reiterated its Buy rating on Plains All American Pipeline LP (NYSE: PAA), and raised its price target from $52.00 to $55.00.
BofA Merrill Lynch noted, “We are raising estimates ahead of PAA's upcoming 4Q12 earnings report and to incorporate recently increased 2013 management guidance. We are boosting our 4Q12 adj EBITDA estimate to $563mn (from $544mn), which compares to the consensus estimate of $522mn. In particular, we expect PAA's 4Q12 results to benefit from the steep discount of Permian Basin crude oil to WTI that occurred during the quarter and persists. The price of Midland crude averaged approximately $7.50/bbl below WTI during 4Q12 primarily driven by limited crude oil pipeline takeaway capacity out of the region. PAA was likely able to benefit from these wide differentials during 4Q12 through its crude oil gathering ops in the West TX region. PAA also recently declared a 4Q12 distribution of $0.5625 ($2.25 annualized), which represents a 3.7/9.8% increase over 3Q12/4Q11 levels, respectively, ahead of the BofAML estimate of $2.21 annualized.”
Plains All American Pipeline LP closed on Tuesday at $48.61.
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