2020 underlying earnings were below UBS estimates because of higher corporate costs and a change in inventory. Nevertheless, the final dividend surprised to the upside with 34% of free cash flow being paid out in the second half.
Amid near-term growth catalysts, Santos remains the broker’s preferred energy exposure. Buy rating retained. Target is raised to $7.90 from $7.70.
Target price is $7.90.Current Price is $6.82. Difference: $1.08 – (brackets indicate current price is over target). If STO meets the UBS target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).