Credit Suisse expects AGL Energy will revise down guidance for FY22 and FY23 after the June station outages.
The broker notes that since May, the Bayswater and Liddell power stations have been performing poorly at a time of exorbitant electricity prices and expects this will cost AGL $150m. The company has also announced that the Loy Yang A unit2 outage will continue to mid September – an extra six weeks.
This is expected to result in a working capital outflow in the second half as the company meets higher AEMO margin requirements and the broker sharply downgrades FY22 earnings forecasts.
On the upside, electricity futures are signalling big price increases in FY24 and the broker’s earnings forecasts sit sharply above downgraded consensus.
Target price rises to $10.40 from $9.30. Outperform rating retained.
Sector: Utilities.
Target price is $10.40.Current Price is $8.55. Difference: $1.85 – (brackets indicate current price is over target). If AGL meets the Credit Suisse target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).
