Karoon Energy shares extend gains as analysts hike price targets
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The news: Karoon Energy shares rallied for the second consecutive session as analysts increased their price targets on the oil and gas explorer, after the company announced the acquisition of floating production, storage and offloading facility (FPSO) Baúna Cidade de Itajaí (CDI) on Thursday.
The numbers: Karoon shares were up 5.3% to $1.53, having added 4.7% in the previous session.
Analysts made the following upgrades to their price targets:
- Morgans: Up 11.5% to $2.45
- Macquarie: Up 11% to $2.10
- Citi: Up 10% to $2.20
The context: Macquarie analysts said they expect the $182 million acquisition to be "highly value-accretive" over the long term, lifting oil production at its Baúna project by 9% and extending its field life from 2030 to 2034.
They noted that the FPSO purchase price was below expectations and is a "major strategic positive", with Karoon's investment case now materially improving.
Citi analysts said the 5% move in Karoon's share price on Thursday "seems underdone" considering the FPSO transaction is accretive for earnings and valuation.
The sources: Macquarie research, Morgans research, Citi research
