AGL – Morgan Stanley rates the stock as Underweight

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In response to media speculation, AGL has confirmed the withdrawal of a non-binding indicative offer for Vocus Group ((VOC)), having not agreed due diligence terms.

Morgan Stanley suspects many investors are surprised by the potential interest in the telco, although synergies on cost-to-serve, energy procurement and technology have been within the company’s stated strategy scope for some time.

The company has also flagged an unplanned outage at Loy Yang A which may take several months to bring back online. FY19 earnings guidance has not changed. The broker retains an Underweight rating. Target is $20.23. Industry view is Cautious.

Sector: Utilities.

Target price is $20.23.Current Price is $20.36. Difference: ($0.13) – (brackets indicate current price is over target). If AGL meets the Morgan Stanley target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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