ORG – Macquarie rates the stock as Neutral

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Origin Energy has upgraded production guidance driven by global LNG supply outages, China demand recovery and higher Korean demand due to nuclear generation outages.  Additionally, there is increased northern hemisphere winter demand.

Macquarie lifts EPS estimates for FY21 and FY22 by 4.6% and 5.3%, respectively. The broker also lifts FY23 by 18.7% due to lower APLNG depreciation, along with cost savings coming through.

As a result of higher production and longer-term capex reductions, the analyst lifts the target price by 13% to $5.47 from $4.84.

APLNG’s cost performance has continued to exceed Macquarie’s expectation, and higher production has added to this. However, the Energy Markets division weighs heavily with the energy price outlook likely to be a drag, warns the broker.

Sector: Energy.

Target price is $5.47.Current Price is $5.19. Difference: $0.28 – (brackets indicate current price is over target). If ORG meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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