Morgans increases its oil price forecasts across FY22-26 and lifts its long-term real price estimate to US$ 65/bbl from US$62/bbl. While there’s thought to be long-term value in the sector, some caution is applied due to short-term volatility.
Add-rated Karoon Energy is the broker’s top small-cap pick in the sector and the target rises to $3.15 from $2.70 from the increased oil price forecasts, despite an increase in the broker’s weighted average cost of capital (WACC) assumption.
Sector: Energy.
Target price is $3.15.Current Price is $1.52. Difference: $1.63 – (brackets indicate current price is over target). If KAR meets the Morgans target it will return approximately 52% (excluding dividends, fees and charges – negative figures indicate an expected loss).
