Credit Suisse observes Woodside Petroleum has been sold off because of a perceived lack of short-term catalysts. The broker also considers a potential equity raising to fund growth and the imminent decline in the North West Shelf are weighing on sentiment.
The broker suggests a large equity raising by the end of 2021 is becoming the consensus view, anticipating around US$2bn may be required to fund a final investment decision on Scarborough.
However, this is not the only scenario and where such is avoided this leaves potential upside. Credit Suisse considers the risks are well priced in and maintains an Outperform rating. Target is lowered to $24.70 from $25.20.
Sector: Energy.
Target price is $24.70.Current Price is $18.42. Difference: $6.28 – (brackets indicate current price is over target). If WPL meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges – negative figures indicate an expected loss).
