Houston, Texas-based APA Corporation (APA) explores for, develops, and produces natural gas, crude oil, and natural gas liquids. With a market cap of $8.1 billion, the company also has exploration and appraisal activities in Suriname, as well as holds interests in projects located in Uruguay and internationally.
Shares of this independent energy company have significantly underperformed the broader market over the past year. APA has declined 39.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 35.7%. In 2024, APA stock is down 38.6%, compared to the SPX’s 25.5% rise on a YTD basis.
Narrowing the focus, APA’s underperformance looks less pronounced compared to the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). The exchange-traded fund has gained about 2.2% over the past year. Moreover, the ETF’s 3.2% gains on a YTD basis outshine the stock’s double-digit losses over the same time frame.
APA had a disappointing performance, attributed to worries about declining natural gas prices and persistent high levels of inventory.
On Nov. 6, APA shares closed up more than 4% after reporting its Q3 results. Its revenue stood at $2.5 billion, up 9.7% year over year. The company’s adjusted EPS declined 24.8% year over year to $1.
For the current fiscal year, ending in December, analysts expect APA’s EPS to decline 12.6% to $3.96 on a diluted basis. The company’s earnings surprise history is disappointing. It missed the consensus estimate in three of the last four quarters while beating the forecast on another occasion.
Among the 25 analysts covering APA stock, the consensus is a “Hold.” That’s based on eight “Strong Buy” ratings, 13 “Holds,” one “Moderate Sell,” and three “Strong Sells.”
This configuration is more bullish than two months ago, with two analysts suggesting a “Moderate Sell,” and two analysts recommending a “Strong Sell.”
On Nov. 13, JPMorgan Chase & Co. (JPM) kept a “Neutral” rating and lowered the price target on APA to $25, implying a potential upside of 13.5% from current levels.
The mean price target of $33.12 represents a 50.4% premium to APA’s current price levels. The Street-high price target of $48 suggests an ambitious upside potential of 118%.
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