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On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Apache Corp . (NASDAQ:APA) shares, reducing the price target from $24.00 to $20.00 while maintaining an Underperform rating. The stock, currently trading at $14.60, has declined nearly 56% over the past year, according to InvestingPro data. The firm's analyst noted Apache's strategic considerations in light of potential oil price challenges and its efforts to reduce costs.
Apache Corp. is actively evaluating its 2025 strategies, with a particular focus on developments in Alaska and the company's initial steps towards cost reduction. With an InvestingPro Financial Health Score rated as 'GOOD' and currently trading below its Fair Value, the company appears positioned to weather market challenges. Despite the absence of immediate drastic changes, Apache is preparing for various scenarios that could arise if West Texas Intermediate (WTI) crude oil prices were to stabilize in the mid-$50s per barrel. In such a case, the company is open to scaling back operations, potentially starting with the Permian Basin.
The analyst also highlighted the ongoing exploration activities in Alaska, where the Sockeye-2 flow test is in progress. Although it might be premature for resource estimates, updates are anticipated during the first quarter earnings call, scheduled for April 30. Apache maintains a strong 6.85% dividend yield and has consistently paid dividends for 55 consecutive years, as noted in InvestingPro's analysis. Additionally, Apache's cost-cutting initiatives are expected to yield approximately $60 million in savings, with the possibility of more significant reductions in the future. By the end of 2027, Apache aims to achieve $350 million in annualized operational and capital expenditure savings.
For the first quarter of 2025, Mizuho's projections are at the lower end of the U.S. oil production guidance due to weather-related issues and third-party downtime. With analyst targets ranging from $14 to $36 per share, market opinions remain divided. The firm's capital expenditure forecast is approximately 3% higher than the guidance, factoring in the timing of activities in Suriname.
The revised net asset value (NAV)-based price target reflects these assessments, moving down to $20 from the previously set $24. This adjustment comes as Apache Corp. navigates a complex market environment, balancing exploration potential with financial prudence. For deeper insights into Apache's valuation and future prospects, investors can access comprehensive analysis and 10+ additional ProTips through InvestingPro's detailed research reports.
In other recent news, APA Corp. has been the focus of multiple analyst reviews and adjustments. Benchmark analysts maintained a Buy rating with a $33 price target for Apache Corp., expecting a first-quarter EPS of $0.90 and EBITDA of $1.33 billion, slightly below consensus expectations. Meanwhile, Raymond (NSE:RYMD) James downgraded APA Corp.'s stock from Strong Buy to Outperform, adjusting the price target from $45 to $32, citing recent cost-cutting measures and a lack of immediate growth drivers. Evercore ISI also revised its price target for Apache, lowering it from $30 to $25 while maintaining an In Line rating, noting the company's focus on its Permian and Egypt operations and a more realistic approach to potential liabilities.
In other developments, Kinetik Holdings Inc. announced a $250 million sustainability-linked notes offering, intended for general corporate purposes, including debt repayment. These notes are part of an additional offering under an existing indenture, with proceeds aimed at supporting the company's broader financial strategy. This move follows Kinetik's previous issuance of $800 million in similar notes. The sustainability performance targets linked to these notes are assessed by ISS ESG, reflecting Kinetik's commitment to integrating sustainability into its financial framework.
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