UPDATE: Morgan Stanley Raises PT on Apache Following Egypt Business Sale
In a report published Friday, Morgan Stanley analyst Evan Calio reiterated an Equal-Weight rating on Apache Corporation (NYSE: APA), and raised the price target from $91.00 to $93.00.
In the report, Morgan Stanley noted, “Apache announced the sale of 33% of its Egypt business to Sinopec on 8/29/13 after market close.We estimate the price APA received for the deal implies a P/CF (2014e) multiple of 4.2x, which compares to the 3.2x APA was trading at pre-deal. On a total corporate NAV basis, we estimate the deal is accretive by ~$2.70/share, or ~3%. However, APA was trading at 4.8x 2014 EV/DACF before the deal. Factoring in the deal, the stock would implicitly trade at 4.9x. We believe the shares should now trade at a higher relative multiple given that some Egyptian overhang is now alleviated. We expect no cash tax on the sale if the proceeds remain in Egypt.”
Apache Corporation closed on Thursday at $78.64.
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