Stifel's take on PAA and PAGP

[dan_s]

Plains All American Pipeline, L.P. (PAA, $23.90, Buy; Target $26.00)
PAA: 2019 Analyst Day Review - Selman Akyol
We recently attended Plains All American Pipelines’ Analyst Day in New York. The Red Oak pipeline project with Phillips 66 was the most significant announcement which improves connectivity, adds value to PAA’s Cushing/Permian footprints and diversifies their Permian deliveries from Cushing. This is offset by higher expected 2020 capital spending which results in higher leverage and less free cash flow. The balance sheet remains management’s priority with an all-in leverage target in the 3.5x to 4.0x range. While we are no longer modeling this level in 2020, it could be reached through additional assets sales, JVs or some form of equity issuance. Our Analyst Day takeaway is more neutral, but we remain positive on PAA given its stronger financial profile and strong Permian footprint.

Plains GP Holdings, L.P. (PAGP, $24.44, Buy; Target $26.00)
PAGP: Analyst Day Update - Selman Akyol
Plains GP Holdings, L.P. is a tracking stock to Plains All American Pipeline, LP and provides investors with a 1099 option to gain exposure as opposed to PAA’s K-1 tax form.