Morgan Stanley wonders whether the stock is now pricing in success. While further outperformance in the near term is possible it will depend on cost initiatives, commodity prices or progress at Narrabri.
Santos has increased its medium-term production target to 120mmboe by 2025. This reflects increased production at Dorado, increased ownership in Darwin and slightly higher GLNG production.
The company has also guided to higher capital expenditure at its investor briefing. The main downside risk is lower oil prices, Morgan Stanley suggests, should global macro concerns persist. LNG market sentiment is also weak.
Equal-weight maintained. Target is $8.00. Industry view: In-Line.
Target price is $8.00.Current Price is $7.94. Difference: $0.06 – (brackets indicate current price is over target). If STO meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).