Down 8% since February, is the AGL (ASX:AGL) share price a buy?


Shares in AGL Energy Ltd (ASX: AGL) are in the green today, up 2.4% trading at $7.45 at the time of writing.

After a difficult 12 months, AGL shares have soared in 2022 alongside the broad commodities sector as investors reshuffle capital and the macro-narrative continues to play out.

However, the energy company’s shares dipped 8% in February, and are down another 4% in the past month of trade as well (shown below).

Is AGL a buy right now?

From what it appears, analyst sentiment is quite mixed on the stock. Exactly 40% of brokers have it as a buy, whereas 50% say to hold or are neutral.

For example, analysts at JP Morgan are bullish on the company and reckon it has the legs to grow tall in 2022.

The broker likes AGL over other names in the energy space, and is overweight on the company due to its robust fundamentals and the market’s outlook.

“Our analysis suggests significant upside to AGL but less so for Origin [Energy],” the broker told clients in a recent note.

“Applying the average customer value of A$956/customer to AGL’s 4.5 million retail customers generates a value of A$4.3 billion,” it added.

“Adding A$2.9 billion for non-baseload assets (predominately hydro) and A$2.4 billion for Accel less net debt generates a total value of A$10.96/share.”

While the broker has its concerns over the AGL demerger, it still believes there is “potential for corporate appeal” in the name, and hence retains its overweight stance on an $8.75 per share valuation.

It is joined by the team at Credit Suisse which rates AGL a buy with an $8.20 per share price target set around two weeks ago.

Meanwhile, analysts at Barrenjoey Markets initiated coverage of AGL today with a neutral, rating an $8.10 price target on the stock.

That’s below the consensus price target of $8.22 per share, according to Bloomberg data.

AGL’s consensus valuation has crept down with its share price in the last 12 months from $18.70, but curiously, more analysts today rate it as a buy than a year ago.

AGL share price snapshot

In the last 12 months, the AGL share price has collapsed more than 28% and is now almost 4% in the red this past month.

However, this year to date, it has climbed more than 20% and is in the green for the previous 5 days of trading.

Source: Read More

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