Apache stock price target lowered to $34 by Wolfe Research

Investing.com - Wolfe Research has lowered its price target on Apache Corp . (NASDAQ:APA) to $34.00 from $35.00 while maintaining an Outperform rating on the stock. According to InvestingPro data, APA currently trades at an attractive P/E ratio of 7.37x and shows signs of being undervalued based on its Fair Value analysis.

The firm notes that Apache has underperformed the Energy Select Sector SPDR Fund (XLE (NYSE:XLE)) by approximately 14% year-to-date, attributing this to the company’s relatively complex portfolio of international and U.S. assets that lacks obvious peers. Despite this underperformance, InvestingPro analysis reveals the company maintains a GOOD overall Financial Health Score and has generated substantial revenue of $10.15B in the last twelve months.

Despite the underperformance, Wolfe Research sees the value of Apache’s embedded resources as significantly above the current share price, with the upcoming startup of its 50% interest in the Granmorgu development in Suriname expected to improve free cash flow by 2028.

The research firm highlights that Apache’s largely unhedged production positions the company to take advantage of current oil price strength for debt reduction, which could help close the gap to fair value.

Wolfe Research also points to several undervalued assets, including Apache’s Suriname interests (with 75% of spending funded by TotalEnergies (EPA:TTEF)), gas trading operations expected to net $575 million this year, and its Egyptian production sharing contracts that provide a cushion against full exposure compared to domestic exploration and production companies. The company offers a robust dividend yield of 4.89% and has maintained dividend payments for 55 consecutive years, as highlighted by InvestingPro’s comprehensive analysis, which includes dozens more valuable insights available to subscribers.

In other recent news, APA Corporation completed the sale of its New Mexico assets for approximately $575 million in net proceeds. This transaction, finalized in June, impacted APA’s second-quarter U.S. production, reducing it by about 1.8 thousand barrels of oil equivalent per day. APA also curtailed natural gas production in response to unfavorable pricing conditions. Additionally, APA disclosed its estimated average realized prices for the second quarter, with U.S. oil priced at $64.85 per barrel and U.S. natural gas at $1.00 per thousand cubic feet. In related developments, APA announced the departure of D. Clay Bretches, Executive Vice President of Operations. Raymond (NSE:RYMD) James has raised Apache’s stock price target to $25, maintaining an Outperform rating, citing strong performance and cost-cutting measures. Furthermore, APA has promoted Aneil Kochar to vice president and treasurer, following Ben C. Rodgers’ advancement to chief financial officer. These changes are part of APA’s efforts to enhance its financial and operational strategies.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.