PAA Should I Buy
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PAA is not a good buy right now. Despite a very oversold short-term RSI that could produce a brief bounce, the broader technical trend is still bearish (bearish moving-average stack and weakening MACD), and the most recent analyst action is a downgrade with a $19 target that sits essentially on top of the current pre-market price (~$19.08). Without supportive proprietary buy signals (AI Stock Picker/SwingMax both absent) and with trend momentum still negative, the risk/reward for an immediate entry is not compelling today.
Trend/momentum is bearish. The moving averages are stacked bearishly (SMA_200 > SMA_20 > SMA_5), which typically signals a downtrend across timeframes. MACD histogram is negative (-0.0944) and expanding lower, indicating downside momentum is still building rather than stabilizing. Counterpoint: RSI_6 at ~13.3 is deeply oversold, which often precedes a short, sharp mean-reversion bounce—but oversold alone is not a reliable buy trigger when MACD is still deteriorating. Key levels provided: Pivot 16.959; Resistance R1 17.635 and R2 18.053 (price is currently above these listed resistances, suggesting the levels may be dated, but directionally they still imply overhead supply zones). Near-term pattern-based projection is modestly positive (model shows ~80% chance of small gains over 1D/1W/1M), but it conflicts with the current momentum signals, so conviction is limited. Next major event risk: earnings 2026-02-06 (pre-market).
Distribution catalyst: PAA announced a quarterly distribution of $0.4175/unit, a 10% increase, with a stated ~8.5% yield—supportive for income-focused demand.
Peer-group income appetite: multiple midstream names highlighted for consistent distribution growth, reinforcing sector-level income tailwinds.
Options market sentiment is call-heavy (very low put/call ratios), implying traders are leaning toward upside/defending downside less aggressively.
Upcoming earnings (2026-02-06 pre-market) could act as an event-driven catalyst if results/guide beat expectations (Est. EPS 0.48).
Analyst overhang: BofA downgraded to Underperform with a $19 target (near current price), explicitly citing less attractive risk/reward and 100% crude exposure.
Technical damage: bearish MA structure plus worsening MACD suggests the path of least resistance remains down until momentum stabilizes.
Business mix risk (per analyst commentary): heavier crude/Permian sensitivity can be a headwind if crude differentials/volumes soften.
Earnings event risk (2026-02-06): a miss or cautious outlook could extend the downtrend quickly given weak momentum.
Latest reported quarter: 2025/Q3. Revenue fell to $11.15B (-12.5% YoY), while net income rose to $387M (+146.5% YoY). EPS was $0.44 (flat YoY). Overall: top-line is contracting, but profitability improved sharply (likely mix/margins/one-offs and/or improved operating leverage), creating a mixed growth picture—better earnings quality versus weaker revenue trend.
Recent analyst trend is mixed but has turned more contentious at the margin. Upgrades/raises: Scotiabank raised PT to $22 (Outperform) and Mizuho raised PT to $23 (Outperform) earlier in January, reflecting improving view on the crude platform and broader infrastructure tailwinds. However, the most recent and most impactful change (2026-01-28) was BofA’s downgrade to Underperform with a $19 PT, arguing recent outperformance has made PAA less attractive for the risk versus peers with more contracted/terminal value. Wall Street pros: attractive income/distribution growth and constructive infrastructure backdrop. Cons: valuation/risk-reward after run-up, higher crude sensitivity, and near-term technical weakness.
