Valued at a market cap of $7.6 billion, APA Corporation (APA) is an independent energy company that explores, develops, and produces natural gas, crude oil, and natural gas liquids. The Houston, Texas-based company has oil and gas operations primarily in the U.S., Egypt, and the North Sea.
Companies worth $2 billion or more are typically classified as “mid-cap stocks,” and APA fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the oil & gas E&P industry. The company excels in both conventional and unconventional resource development, with a proven track record in deepwater exploration, and efficient extraction from mature oil fields in Egypt and the Permian Basin. Its strengths lie in its diverse asset portfolio, operational efficiency, and strategic exploration success.
This energy company has slipped 41.7% from its 52-week high of $36.05, reached on Apr. 8, 2024. It has declined 4.8% over the past three months, outpacing the broader Nasdaq Composite’s ($NASX) 12.3% loss over the same time frame.
However, in the longer term, APA has fallen 38.9% over the past 52 weeks, considerably lagging behind NASX’s 5.6% uptick over the same time frame. Moreover, on a six-month basis, shares of APA are down 14.3%, compared to NASX’s 4.5% decrease.
To confirm its bearish trend, APA has been trading below its 200-day moving average since the past year, and has remained below its 50-day moving average since late January, despite some fluctuations.
On Mar. 3, APA’s stock fell 8.7% after WTI crude oil prices hit a nearly three-month low. The drop followed a Bloomberg report that OPEC+ would restart halted production and increase output by 138,000 barrels per day in April. This news raised concerns about potential oversupply in the market, leading to a broader decline in energy stocks, including Diamondback Energy, Inc. (FANG) and ConocoPhillips (COP)
Moreover, shares of APA plunged 7.2% following its mixed Q4 earnings release on Feb. 26. The company’s revenue rose 32.2% year-over-year to $2.5 billion, surpassing expectations by 10.1%. However, due to higher operating expenses and lower commodity prices, its adjusted earnings fell 31.3% from the year-ago quarter to $0.79 per share, and missed Wall Street’s forecast of $0.97.
Nonetheless, APA’s management announced cost reduction initiatives to improve efficiency and streamline operations. The company aims to achieve at least $350 million in sustainable annual savings by 2027 across lease operating expenses (LOE), capital spending, and overhead costs.
APA has lagged behind its rival, Occidental Petroleum Corporation’s (OXY) 24.1% decline over the past 52 weeks and 3.3% fall over the past six months.
Despite APA’s recent outperformance relative to the Nasdaq, analysts remain cautious about its prospects. The stock has a consensus rating of “Hold” from the 26 analysts covering it, and the mean price target of $27.81 suggests a 32.3% premium to its current levels.
