AGL Energy: Strong 2H but headwinds in the medium term

About the author:

Author name:

By Max Vickerson

Job title:

Analyst

Date posted:

11 August 2023, 7:00 AM

Sectors Covered:

Industrials, New Energy

• AGL Energy (ASX:AGL) reported a much stronger 2H23 but it is facing structurally higher costs and capital expenditure. For now higher tariffs are supporting higher earnings but we see headwinds returning in the medium term.
• It’s possible that the electricity market could tighten further to push prices above their already high levels but we don’t believe this is a sustainable business model.
• We maintain our HOLD rating with a reduced price target of (login to view) and 12-m potential TSR of -4%.

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