ASX-listed company AGL Energy Limited’s (AU:AGL) share has grown by more than 55% in the last six months. The share price went on an upward trajectory after the company announced its half-yearly earnings for 2023. Even though the earnings missed market expectations, analysts are bullish on the stock, expecting higher profits and growth in fiscal year 2024. In the past year, the stock has experienced 38% growth in trading.
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AGL Energy is an Australian energy company that provides electricity and gas to more than 4 million customers. The majority of the company’s earnings come from wholesale markets, while energy retailing constitutes approximately half of the earnings.
The Number Game
Last week, the company hosted its investor day, which underscored the significant progress in its recovery journey.
The revised guidance now estimates the underlying EBITDA to range between AU$1,330 million and AU $1,375 million, an increase from the previous range of AU$1,250 million to AU$1,375 million. The underlying profit after tax is expected to fall within the range of AU$255 million to AU$285 million, representing an upgrade from the numbers previously announced.
The enhanced guidance numbers indicate a strong performance in the latter half, driven by improved power station reliability as well as growth in retail customer numbers and profit margins. The company anticipates a further increase in earnings for 2024, propelled by elevated wholesale electricity prices, the commencement of grid-scale battery operations, and a reduction in outages.
Analysts’ Reaction
After the updated guidance number, analysts have confirmed their Buy rating on the stock.
Yesterday, four-star-rated analyst Tom Allen from UBS reiterated his Buy rating on the stock, predicting a 10% growth in the share price.
Two days ago, analysts from Bank of America Securities and Ord Minnett also maintained their Buy ratings on the stock, expecting a 4% and 16% hike in share price, respectively.
What is the Recommendation for AGL’s Share Price?
According to TipRanks’ consensus forecast, AGL stock has a Moderate Buy rating based on four Buy versus two Hold recommendations.
At an average target price of AU$11.42, analysts suggest a modest growth of 3.63% on the current price.
Conclusion
The company expects its second half to witness improvements in its operational performance. Additionally, management’s confirmation of an expected profit recovery in fiscal 2024 further contributes to this positive sentiment for investors.
