2023-07-12 15:37:27 ET
APA Corp. ( NASDAQ: APA ) edges higher in Wednesday's trading even after Goldman Sachs downgraded the stock to Sell from Neutral with a $30 price target, trimmed from $35, citing concerns about upstream asset risks across its global portfolio.
Goldman said its relative Sell rating is underpinned by four key drivers: less differentiated assets in the U.S. and Egypt with more elevated downside risks from the North Sea, on track for one development project at Suriname but upside is more limited based on results to date, downside risk to consensus free cash flow, and downside risk to valuation.
APA's ( APA ) Permian Basin assets have solid productivity but are less differentiated on resource life vs. peers, the company has shown mixed execution in Egypt in recent quarters, and the company plans to decline North Sea production following higher cash taxes, Goldman said.
The bank revised its free cash flow forecasts for 2023 and 2024 to come in at a respective $1.1B and $1.4B, below consensus expectations of $1.5B and $1.7B.
Goldman also upgraded Marathon Oil ( MRO ) to Neutral from Sell with a $25 PT.
More on APA Corp.:
- Financial and valuation comparison to sector peers
- Analysis: APA Corp.'s Egypt Operations Offset By Domestic And U.K. Headwinds
- Stock price return: Down 14.5% YTD, up 9% in the past 12 months
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APA Corp. cut to Sell equivalent at Goldman on asset risk concerns