Shareholders of Plains All American Pipeline LP (NYSE: PAA) and Plains GP Holdings LP (NYSE: PAGP) endured an ugly Q2 earnings report this week that drove MLP unit prices down 10.5 percent and 23.2 percent, respectively.

But is the performance and price weakness a buying opportunity or a sign of more bad things to come?

Here’s what Citi Research analyst Faisel Khan had to say.

Current Situation

One of the major reasons for the plunge in unit prices was Plains management’s revelation that they may choose not to grow distributions until at least 2017 in an attempt to get distribution coverage back to 1.1x. In addition, negative comments about midstream overcapacity only added to the negative sentiment surrounding the industry, and Khan believes that things could possibly even get worse before they get better.

Outlook

Despite the short-term negative outlook, Khan believes…

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