A leading broker thinks this energy producer’s shares are in the buy zone…
The post Beach Energy (ASX:BPT) share price jumps 7% on broker upgrade appeared first on The Motley Fool Australia. –
The Beach Energy Ltd (ASX: BPT) share price is the best performer on the ASX 200 on Wednesday.
In afternoon trade, the energy producer’s shares are up 7% to $1.11.
Why is the Beach Energy share price racing higher?
Investors have been bidding the Beach Energy share price higher today after it was the subject of a positive broker note.
According to a note out of Citi, its analysts have upgraded the company’s shares to a buy rating from neutral.
And while the broker has trimmed its price target down to $1.27, based on the current Beach Energy share price, this still implies attractive potential upside of 14% over the next 12 months.
Why did Citi upgrade Beach’s shares?
Beach Energy delivered a result ahead of Citi’s expectations earlier this week. And while its guidance for FY 2022 disappointed, the broker believes things will improve in FY 2023. This is due to the ramp up of Waitsia and Otway.
Beach Energy expects production of 21 to 23 mmboe in FY 2022. This is lower than the consensus estimate of 24.4mmboe due to larger Western Flank declines.
It also feels the recent weakness in the Beach Energy share price has now fully priced in its softer than expected guidance for FY 2022 and that this will be the bottom for its production.
Is anyone else positive on Beach Energy?
Interestingly, while Goldman Sachs has a neutral rating on its shares, its price target of $1.40 is much higher than Citi’s.
Goldman explained that it is remaining neutral due to its belief that more value is on offer with Origin Energy Ltd (ASX: ORG) shares.
It explained: “BPT is cheap versus historical metrics but on a relative basis and for a continued leverage to the rebound in oil, LNG and domestic gas we prefer Origin Energy (Buy-CL) trading on a FCF yield of ~19% in FY23 (vs. ~10% for BPT). We remain Neutral rated with a 12m TP of A$1.40.”
Beach Energy shares are down 40% in 2021.
Should you invest $1,000 in Beach Energy right now?
Before you consider Beach Energy, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Beach Energy wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.