Origin Energy has downgraded FY21 energy markets guidance by -13% at the mid point. This stems from further margin pressure as a result of lower wholesale electricity prices and higher gas procurement costs.
UBS expects mild summer weather will lower earnings from the peaking generation fleet. The broker retains a Buy rating based on valuation and reduces the target to $5.75 from $6.65.
The broker believes the company has a means of reducing its exposure to lower average wholesale prices by augmenting its Eraring coal-fired power station with batteries, and potentially gas turbines, over the next few years.
Sector: Energy.
Target price is $5.75.Current Price is $4.53. Difference: $1.22 – (brackets indicate current price is over target). If ORG meets the UBS target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
