Roth Downgrades APA to Neutral Due to Weak Oil Macro and Higher Leverage

APA Corp. was downgraded to Neutral from Buy by Roth Capital due to its higher leverage compared to peers and weak oil macro. The company's shares fluctuated between small gains and losses in trading. The price target was set at $22.

APA Corp (APA) has seen its stock rating downgraded to "neutral" by Roth Capital, following concerns over the company's higher leverage compared to peers and a weak global oil macro environment. The brokerage firm has reduced its price target for APA from "buy" to $22, representing a 7.6% upside from the stock's last close [1].

Roth Capital's downgrade is primarily driven by two key factors. Firstly, the firm is concerned that global oil prices could continue to decline, with downside risk for the first half of 2026. Secondly, the brokerage expects the quality of APA's Permian wells to deteriorate towards the end of this decade, as the company's acreage is generally less economic compared to its better-positioned peers [2].

The downgrade has led to fluctuations in APA's stock price, with shares wobbling between small gains and losses in Wednesday's trading. Despite the downgrade, the new price target still represents a 7.6% upside to the stock's last close, indicating that Roth Capital sees potential in APA's long-term prospects.

APA Corp's recent earnings report, however, provided some positive news. The company beat Wall Street estimates for quarterly profit, with stronger natural gas production in Egypt and higher prices helping to offset the impact of weaker oil prices and lower total output [3].

The company's adjusted profit of 87 cents per share for the second quarter ended June 30 was above the average analysts' estimate of 48 cents per share. APA's average realized gas prices rose nearly 29% in the second quarter to $2.28 per thousand cubic feet, while natural gas volumes increased by 7% to 894 million cubic feet per day.

Despite the downgrade, APA Corp's strong performance in Egypt and the potential for significant oil and gas exploration in the region could provide a buffer against the challenges posed by weaker global oil prices and higher leverage.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3U5113:0-roth-mkm-downgrades-apa-corp-to-neutral-cuts-pt/
[2] https://seekingalpha.com/news/4484885-apa-downgraded-at-roth-on-weak-oil-macro-shorter-u-s-inventory-life-vs-peers
[3] https://www.reuters.com/business/energy/apa-beats-second-quarter-profit-estimates-stronger-natgas-output-prices-2025-08-06/