At Macquarie’s conference, AGL reiterated FY19 guidance but warned of headwinds in FY20. Recent forward movements are not leading to pricing strength, the broker notes, while LREC benefits are fading. Government regulation will limit price growth in retail and the risk is for further regulation around emissions.
The good news is cash generation remains strong and the balance sheet is under-utilised. The broker cuts FY20 forecast earnings by -9% and its target to $20.67 from $20.78. Neutral retained.
Sector: Utilities.
Target price is $20.67.Current Price is $22.23. Difference: ($1.56) – (brackets indicate current price is over target). If AGL meets the Macquarie target it will return approximately -8% (excluding dividends, fees and charges – negative figures indicate an expected loss).
