Truist cuts Apache Corp target to $45, keeps ‘buy’ rating By Investing.com

On Monday, Truist Securities revised its price target for Apache Corp . (NASDAQ:), decreasing it to $45 from the previous $52 while maintaining a Buy rating on the stock. The adjustment comes after the firm updated its financial model to reflect revised price assumptions and updated forecasts for the years 2024 through 2026.

The new price target is based on two equally weighted methodologies. The first applies a 4.0x multiple to the firm’s 2025 estimated EBITDAX (earnings before interest, taxes, depreciation, amortization, and exploration expenses) of $6,319 million, which is slightly above the consensus estimate of $6,152 million. This multiple is just under the peer average of 4.1x.

The second methodology is based on a free cash flow to enterprise value (FCF/EV) yield assumption of 13.0%. This dual approach aims to provide a balanced valuation of Apache Corp’s stock, taking into account both earnings potential and cash generation efficiency relative to the company’s market valuation.

The revision reflects Truist Securities’ latest analysis and expectations for Apache Corp’s financial performance over the next few years. Despite the lowered price target, the firm’s Buy rating indicates a positive outlook on the stock’s future performance.

Truist Securities’ updated analysis of Apache Corp. provides investors with a new valuation benchmark as they consider the company’s stock amidst changing market conditions and forecasted company performance. The price target adjustment is a direct result of the firm’s updated financial model and revised price deck.

In other recent news, Apache Corp has made several notable moves. The company’s earnings per share and cash flow per share have been projected at $0.93 and $2.99 respectively, according to Scotiabank. Scotiabank also reported that Apache’s gas and liquids curtailments surpassed initial projections. Following the acquisition of Callon (NYSE:) Petroleum, Apache refrained from providing second-quarter 2024 depreciation, depletion, and amortization guidance but is now indicating a consolidated figure of $590 million.

Moreover, Apache Corp reported a net gain of $130 million from oil and gas purchases and sales activities. The company also made strategic decisions to curtail the production of gas and gas liquids due to unfavorable pricing. Apache Corp also reported repurchasing 1.5 million shares within the quarter, part of its ongoing efforts to manage its share count and return value to shareholders.

In terms of asset management, APA Corporation sold its non-core assets in two transactions, generating over $700 million, which will primarily be used to lower near-term borrowings. This move aligns with APA Corporation’s strategy of actively managing its portfolio and monetizing non-core assets at attractive prices. These are the recent developments for Apache Corp.

InvestingPro Insights

Recent data from InvestingPro highlights key financial metrics for Apache Corp. (NASDAQ:APA) that can provide investors with a deeper understanding of the company’s current standing. With a market capitalization of $11.59 billion and an enticing P/E ratio of 3.57, Apache presents an interesting value proposition, especially given its adjusted P/E ratio for the last twelve months as of Q1 2024 standing at 3.96. The company’s dividend yield is also notable at 3.12%, reflecting a commitment to shareholder returns, emphasized by its track record of maintaining dividend payments for 54 consecutive years.

InvestingPro Tips suggest that despite some analysts revising their earnings downwards for the upcoming period, the company is still expected to be profitable this year. Additionally, the stock has experienced a strong return over the last month, with a 13.96% price total return, signaling investor confidence. For those interested in exploring further insights and tips, InvestingPro offers additional analysis, and by using the coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

While Truist Securities has adjusted its price target for Apache, these InvestingPro metrics and tips provide a broader context for investors considering the stock. The combination of a low P/E ratio, consistent dividends, and recent stock performance are factors that could influence investment decisions. Moreover, with 17 more InvestingPro Tips available for Apache Corp., investors have access to a wealth of information to help guide their investment strategy.

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