Goldman Sachs analyst Umang Choudhary downgraded APA Corp. to Sell from Neutral with a $30 price target after assuming coverage of the name. The analyst has concerns around the company’s base assets in the U.S. where resource life is below peers, Egypt due to mixed execution over the past year, and North Sea dye to a declining free cash flow profile with a pullback in activity following higher taxes. In addition, APA has more limited upside potential beyond one development project at Suriname based on results to date, the analyst tells investors in a research note. The firm sees downside risk to consensus free cash flow expectations in 2023 and 2024 and believes a further valuation discount is warranted.
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