Morgans views Woodside Petroleum’s share price as trading at a discount to the value of its existing operations.
As a result the broker upgrades the rating to Add from Hold and maintains the target price of $23.40.
The pursuit of growth opportunities and maintenance of an elevated dividend payout ratio raises the spectre of the need for additional external capital.
However, under various equity raise scenarios, Morgans shows the company’s value is more sensitive to an eventual recovery versus future dilution risk.
The analyst points out a key risk would be a more severe regional economic hit from covid-19, than currently assumed by the broker.
Sector: Energy.
Target price is $23.40.Current Price is $18.64. Difference: $4.76 – (brackets indicate current price is over target). If WPL meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).
