Woodside Energy shares rise as analysts expect strong quarterly results
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The news: Shares in Woodside Energy rose as analysts predict strong September quarter results due to production at its Sangomar and Pluto projects.
The numbers: Woodside shares were up 0.85% to $25.91 by 1:10pm AEDT, having lowered nearly 30% over the last 12 months.
However, Macquarie downgraded Woodside from 'outperform' to 'neutral' and cut its 12-month target price 18% from $33 to $27.
Macquarie also reduced its earnings per share estimates by 3% in both 2024 and 2025, and by 10% in 2026, driven by higher interest costs due to more debt following new acquisitions.
The context: Macquarie analysts flagged that Woodside's recent investments in new acquisitions to reposition the company for the long term will mean elevated capital expenditure until around 2030.
The analysts said that Woodside's "aggressive" growth strategy means a dividend cut now "looks likely".
They also noted that Woodside's need to invest in lower return projects, such as its Beaumont Clean Ammonia project in the US, is a "key reason" for Macquarie lowering its enterprise value to EBITDA target multiple.
Elsewhere, Macquarie expects Woodside's third quarter to be its strongest quarter since Q4 2022, driven by production at its Sangomar and Pluto projects.
RBC Capital Markets also expects Sangomar's "very strong" initial performance to help deliver strong September quarter revenue growth for Woodside. RBC analyst Gordon Ramsay said that a higher overall liquified natural gas (LNG) price and continued high LNG plant availability will also boost Woodside's results.
RBC forecasts sales revenue 5% ahead of Visible Alpha consensus, and Australian pipeline gas production 9% above average estimates.
RBC has an 'overweight' rating on the stock with a $33.50 price target.
Woodside is set to report is quarterly earnings on 16 October.
The sources: Macquarie research, RBC Capital Markets research
