On Thursday, RBC Capital maintained its Sector Perform rating on Apache Corp . (NASDAQ: NASDAQ:APA) with a steady price target of $34.00. The firm's assessment followed Apache's pre-earnings supplemental release, which prompted a modest increase in RBC Capital's third-quarter 2024 estimates for the company.
The upward revision was attributed to better-than-expected oil and natural gas liquids (NGL) realizations along with higher marketing revenue, although Apache's stock buybacks fell short of expectations.
Apache's recent financial update highlighted improved revenue streams from oil and NGL sales, which exceeded the company's own guidance and analyst projections. This positive performance was partially offset by production curtailments at the Alpine High project due to unfavorable Waha prices. The production at Alpine High was above the guidance but slightly below the figures accounted for in RBC Capital's model.
Despite the positive aspects of Apache's financials, the company's stock buyback activity was notably lower than anticipated. The firm reported only $3 million in stock repurchases, a figure that fell short of the analyst's estimates. This level of buyback activity could reflect the company's strategic financial decisions or market conditions impacting Apache's capital allocation.
Apache Corp. has not yet released its full earnings report, but the preliminary information provided suggests a mixed outcome with some financial metrics surpassing expectations and others not meeting analyst predictions. The company's stock performance and investor returns remain under scrutiny as the full quarterly results are awaited.
RBC Capital's unchanged price target of $34.00 for Apache Corp. indicates the firm's neutral stance on the stock's valuation, suggesting that the analyst sees the current price as reflective of the company's fundamentals and market position. Investors and stakeholders will be looking to Apache's forthcoming earnings announcement for a comprehensive view of the company's financial health and strategic direction.
In other recent news, APA Corporation reported significant gains and curtailments in Q3 2024, including a realized gain on commodity derivatives before tax of $3 million and a substantial gain on natural gas transactions with Cheniere, totaling $178 million before tax.
The company also announced the sale of non-core assets in the Permian Basin for $950 million and revealed an estimated dry hole cost ranging from $10 to $15 million. APA Corporation and TotalEnergies (EPA:TTEF) have committed to a sizeable $10.5 billion investment in Suriname's Block 58 offshore oil project, expected to produce over 750 million barrels of oil starting in 2028.
Analyst firms Truist Securities and Wolfe Research upgraded their price targets for APA Corporation, citing operational opportunities in Suriname, the Permian region, and Egypt. However, Mizuho maintained an underperform rating, noting the higher costs of the Suriname project.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Apache Corp.'s (APA) financial position and market performance. The company's P/E ratio of 2.91 suggests that it may be undervalued relative to its earnings, which aligns with the company's profitability over the last twelve months. This low P/E ratio could be particularly interesting in light of RBC Capital's maintained Sector Perform rating and $34.00 price target.
InvestingPro Tips highlight that APA has maintained dividend payments for 54 consecutive years, demonstrating a strong commitment to shareholder returns. This is especially noteworthy given the current dividend yield of 3.8%, which may attract income-focused investors. However, it's important to note that 14 analysts have revised their earnings downwards for the upcoming period, which could explain the stock's recent volatility mentioned in another InvestingPro Tip.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide valuable context to Apache's financial outlook and market position.
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