UBS has reaffirmed a Buy rating on Plains All American (NASDAQ: PAA) and maintained a $25.00 price target, signaling continued analyst conviction in the company’s near-term cash return profile. The stock was trading around $19.11 at the time of the note and is considered undervalued versus InvestingPro Fair Value estimates.
The UBS research note called attention to Plains All American’s plan to implement capture efficiency initiatives that are expected to yield roughly $100 million in cost savings through 2027. UBS said about half of those savings are likely to materialize in 2026. In addition, the firm pointed to approximately $50 million in prospective synergies tied to the company’s Cactus III project.
The firm also highlighted a corporate change in the company’s leverage metric. Plains All American lowered its debt service coverage ratio coverage threshold from 160% to 150%. UBS characterized that adjustment as constructive, interpreting it as a sign of more predictable cash flow and as providing a multi-year runway to support targeted annual distribution growth of $0.15 per unit.
Investors are receiving a meaningful yield from the company’s distributions. At the time of the report, the unit offered roughly an 8.4% dividend yield. UBS suggested that a further $0.15 increase in the distribution in 2027 could lift that yield to about 9.3%, a change the firm described as reinforcing an "excellent cash returns to shareholder story."
Those positive operational and capital return themes come against a backdrop of mixed quarterly results. Plains All American reported fourth-quarter 2025 earnings per share of $0.40, below the consensus estimate of $0.47. Revenue for the quarter was reported at $10.57 billion, short of the $13.42 billion analysts had expected. Despite the quarterly misses, market participants saw a follow-up note from Scotiabank that raised its price target to $23.00 from $22.00 while maintaining a Sector Outperform rating.
On outlook metrics, Plains All American provided 2026 EBITDA guidance with a midpoint of $2.75 billion, which UBS noted sits in line with consensus expectations. The combination of cost savings targets, expected project synergies and a change to the coverage threshold are the primary factors underpinning UBS’s reiterated Buy stance.
Summary
UBS reiterated a Buy on Plains All American with a $25 price target, citing planned capture efficiency savings of about $100 million through 2027, roughly $50 million of Cactus III synergies, a lowered DSCR threshold to 150%, and an attractive distribution yield that could rise further if management follows through on a planned increase.