We’ve covered APA several times recently and continue to see plenty of questions on our holding. We’re sitting on a loss of ~18% in the Active Income Portfolio and have been strong advocates of the stock, which has fallen in price. One of the key aspects of the Market Matters service is being real, being transparent, and providing regular updates on stocks that have not worked out as we intended, APA being an example.
While we don’t solely rely on sell-side (broker research), we do use it, and Barrenjoey has been cautious and right on APA for a while. Last week, they upgraded their call to Overweight with an $8.60 price target, around ~30% above the share price at the time. The is based on valuation, essentially the market selling the stock off too far. Macquarie have been more positive on APA over time, and they also released a new note on the stock, slightly tweaking their numbers lower but maintaining at outperform and $8.13 price target. JP Morgan is the most bullish of top tier brokers with a $9.15 target, having updated their numbers in October.
We do often caution about all brokers being a certain way on a stock as it can create a dearth of new buyers (or sellers), however that’s not the case with APA. There remains enough scepticism by some in the market to imply that APA is not universally owned.
- On a yield above 8% underpinned by a regulated asset base in an environment of lower interest rates (at some point), we continue to think APA is a highly attractive income stock.
MM remains long & bullish APA
Add To Hit List
