Origin Energy extends losses after downgrading Octopus guidance
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The news: Shares in Origin Energy extended losses in morning trade after softer earnings at the company's UK renewable energy business Octopus Energy saw the stock tumble on Monday.
The numbers: Origin shares were down 1.4% to $10.36 at 11:50am AEST after ending 4.9% lower in the previous session. Utilities was the worst performing sector on Tuesday, down 1.1%, with the ASX 200 index roughly flat.
On Monday, Origin said Octopus was expected to report a full-year loss of up to $100 million, down from its previous guidance of up to a $100 million profit.
The context: UBS noted that lower Octopus earnings are being driven by one-off impacts from the UK government price guarantee subsidy and an unseasonably warm spring, which saw lower customer volumes, with similar impacts felt by peers Centrica and British Gas.
However, UBS flagged that Octopus is continuing to win market share, albeit in a competitive price environment.
UBS retained its 'buy' rating and $11.70 price target on the stock.
The source: UBS research
