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Investing.com - Goldman Sachs upgraded AGL Energy Ltd. (ASX:AGL) from Neutral to Buy, maintaining its price target of AUD11.35, citing 28% upside potential following a 13% sell-off in the stock.
The investment bank expressed increased confidence in AGL’s medium-term earnings outlook, supported by accelerated battery contributions. Goldman Sachs noted that falling battery prices, currently at $0.4 million per MWh, should continue to improve the company’s earnings ahead of planned closures of its Bayswater and Loy Yang A facilities between 2033 and 2035.
AGL is trading with a 5% dividend yield based on Goldman Sachs’ fiscal year 2026 estimates, which project AUD0.56 billion in net profit after tax. The company maintains a minimum 50% earnings per share payout policy.
Despite AGL’s increased capital expenditure guidance to AUD1.5 billion, Goldman Sachs believes the company’s balance sheet remains "comfortable" as it continues to generate positive free cash flow while accelerating battery development initiatives.
The upgrade follows a period of share price weakness for the Australian energy company, which also trades over-the-counter in the United States under the ticker AGLNF.
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