APA Group (APAJF) has received a new Hold rating, initiated by Goldman Sachs analyst, Henry Meyer CFA.
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Henry Meyer CFA has given his Hold rating due to a combination of factors that influence APA Group’s current market position and future prospects. The company stands to gain from increased reliance on its Southernhaul gas pipeline as gas demand rises and Victorian production declines. However, the potential growth opportunities from APA’s risked growth pipeline are already reflected in the current valuation, with risks of project delays or reduced utilisation due to support for LNG import terminals or coal plant extensions.
Additionally, while APA offers a progressive distribution policy with a 6.5% yield, the stock appears fully valued, particularly considering the expected reduction in earnings from the Wallumbilla Gladstone Pipeline after contract expiry in FY36. The company’s valuation multiples suggest that the market has already priced in the anticipated earnings from new developments and cost reduction efforts. Furthermore, uncertainties in southern state gas supply policies and customer demand in the Pilbara region add to the cautious outlook, limiting expectations for immediate upside.
Meyer CFA covers the Energy sector, focusing on stocks such as Amplitude Energy, Strike Energy Limited, and Santos Limited. According to TipRanks, Meyer CFA has an average return of -5.0% and a 47.83% success rate on recommended stocks.