Source: Investing Posted 20/08/2024, 13:11
Bernstein, a prominent financial firm, downgraded Woodside Energy Group Ltd (WDS: AU) (NYSE: WDS), shifting the rating from “Outperform” to “Market Perform”.
The company also revised its target price for the company’s shares to Australia $28.00, down from the previous price of $37.00 Australia.
The cut comes as Bernstein analysts predict a possible shift in natural gas market dynamics. According to their assessment, while Woodside Energy and Santos Ltd have seen benefits from rising gas prices over the past three years, there may be a shift towards lower gas prices.
Analysts expect that this change, along with continued high capital expenditures (capital expenditures), could reduce returns and profits in the near term for these companies.
Bernstein updated his 2025 earnings per share estimate for Woodside Energy, cutting them by 11% to align with adjusted oil price assumptions and Japan’s Korea Index (JKM) prices.
The new estimates are based on an adjustment for the price of Brent oil from $84 to $80. In addition, the recent acquisition of the U.S. ammonia plant by Woodside prompted Woodside to lower the company’s free-flow, (FCF) estimates in the near term.
The company’s updated 2025 EPS forecast for 2025 for Woodside Energy and Santos now stands 3% and 12% lower than the consensus estimates, respectively.
In other recent news, Woodside announced a major legal win for its Scarborough project, which is expected to boost its production capacity. In addition, Woodside Energy forecasts strong performance for half of 2024 based on current market conditions and operational expectations.
The company has also expanded its business portfolio by acquiring Orascom Construction International’s clean ammonia project and Tellurian, in line with the industry’s shift towards more sustainable fuel alternatives and strengthening its position in the LNG sector.
Furthermore, Woodside Energy achieved the first oil extraction at the Sanjomar field, which is expected to boost the company’s production capacity and financial performance.
