Are APA shares a buy after reaching a three-year high?

APA Group (ASX: APA) shares have climbed another 0.6% to a three-year high of $10.18 at the time of writing. 

The latest increase means the shares are now 13% higher for the year-to-date, having rebounded nearly 19% since mid-January. APA shares are now also 22% higher than 12 months ago.

Why are APA shares climbing higher?

There is no price-sensitive news out of APA recently to explain the latest share price surge. The share price hike is likely the result of investors increasingly rotating into defensive income-generating shares during ongoing volatility.

APA is Australia’s largest energy infrastructure company, owning and operating an extensive portfolio of gas, electricity, solar, and wind assets.

The company is also a major owner and operator of Australia’s gas distribution network, including pipelines, gas-fired power stations, and storage facilities. It transports more than half the natural gas used in Australia. 

Since listing on the ASX in 2000, APA Group has substantially grown its energy assets. More recently, it has added solar farms to its portfolio. 

APA announced its latest expansion plans in February, around the same time it posted an impressive first-half FY26 result.

APA posted a 7.6% jump in underlying EBITDA to $1,092 million and upgraded its organic growth pipeline from $2.1 billion to around $3 billion for FY26 to FY28.

FY26 Underlying EBITDA guidance is unchanged at $2,120–$2,200 million, with expectation to exceed midpoint.

The company also said it is on track to achieve $50 million in full-year cost savings, helped by simplification efforts including the sale of its Networks business and pending divestment of its GDI stake.

It’s this continued long-term revenue which means the company is able to pay a consistent passive income to its shareholders too.

APA paid an interim dividend of 27.5 cents in the first half of FY26 and is guiding a full-year dividend of 58 cents per security. That translates to a forward distribution yield of 5.7%, partially franked, at the time of writing.

Are the shares a buy, sell or hold now?

Despite the latest share price rally, and the company’s attractive passive income, analysts aren’t too optimistic about the outlook for APA shares over the next 12 months.

According to TradingView data, four out of nine analysts have a hold rating on the stock, three have a sell or strong sell rating. Others are more bullish with a buy or strong buy rating.

But, the average target price for APA shares is $8.96, which implies a potential 12% downside at the time of writing.

Even the best-case scenario $10.41 maximum target price implies a minor 3% upside from the current trading price. 

The post Are APA shares a buy after reaching a three-year high? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Apa Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.