UBS suspects weakening electricity prices will affect forecast earnings. The broker reduces FY20-22 estimates for earnings per share by -3-16%.
The share price declined around -20% over the year to date but the broker considers this largely factoring in the lower wholesale electricity prices.
Meanwhile, the balance sheet is strong and there is around $800m per annum to fund further capital management and/or growth opportunities.
UBS suggests a final investment decision on Crib Point LNG import terminal could enable AGL Energy to win back market share and support the investment in a new flexible gas power station.
Neutral rating maintained. Target is reduced to $16.60 from $18.00.
Target price is $16.60.Current Price is $16.54. Difference: $0.06 – (brackets indicate current price is over target). If AGL meets the UBS target it will return approximately 0% (excluding dividends, fees and charges – negative figures indicate an expected loss).