UPDATE: Credit Suisse Downgrades Plains All American Pipeline LP to Neutral Following Great 1Q Results

In a report published Wednesday, Credit Suisse analyst John Edwards downgraded the rating on Plains All American Pipeline LP

from Outperform to Neutral, but raised the price target from $60.00 to $62.50. In the report, Edwards noted, “PAA reported 1Q results that crushed CS and consensus estimates and has once again lifted its FY EBITDA outlook. However, we believe that PAA units are fairly valued and are downgrading to Neutral though we still forecast NTM total return potential of 8%-15%. PAA took advantage of favorable basis/grade spreads to record $3.95/bbl margins in its S&L segment. PAA specifically cited wide Midland-Cushing, LLS-WTI, and WTI vs. Canadian spreads during the quarter. PAA had guided to $2.83/bbl margins. However, with spreads tightening, PAA is guiding to $1.19/bbl margins for 2Q and $1.15/bbl for 2H:13. We are modeling $1.49/bbl for 2Q and $1.45/bbl for 2H:13 based on the Brent-WTI futures curves. PAA is guiding its distribution growth to approximately 9-10% for the next few years. We are raising our outlook to a three-year CAGR of 11% as PAA builds out its fee-based business with the excess cash flow generated by the S&L segment.” Plains All American Pipeline LP closed on Tuesday at $58.37.