Morgan Stanley cuts AGL Energy stock rating to Equalweight

Published 05/03/2025, 12:22
Morgan Stanley cuts AGL Energy stock rating to Equalweight

On Wednesday, Morgan Stanley (NYSE:MS) adjusted its stance on AGL Energy Ltd (OTC:AGLXY). (AGL:AU) (OTC: AGLNF), downgrading the stock from Overweight to Equalweight and reducing the price target to AUD11.88 from the previous AUD12.66. The revision reflects a reassessment of the company’s risk and return profile in the context of the broader Australian Utilities & Infrastructure sector.

The firm’s analysts highlighted that while AGL Energy’s estimated one-year total shareholder return (TSR) of approximately 17%, which includes a roughly 5% yield fully franked, positions the company in the second quartile for estimated returns within their coverage, they also noted that AGL presents higher risk and a declining profile. Despite this, Morgan Stanley acknowledged the positive long-term potential of AGL’s customer strategies and energy transition plans, which they believe could counterbalance the persistent competition and execution risks.

Furthermore, Morgan Stanley pointed to the company’s environmental, social, and governance (ESG) risk as rapidly improving. They suggested that AGL Energy could become a candidate for their ESG Rate of Change investment framework, particularly if the company presents concrete plans for renewable capital expenditures that are deflationary in nature.

AGL Energy’s efforts in transitioning towards more sustainable energy sources and its customer-focused strategies are seen as steps in the right direction, despite the challenges that the competitive landscape may pose. The firm’s analysts have adjusted their outlook to reflect the balance between these positive initiatives and the associated risks. The new price target of AUD11.88 represents Morgan Stanley’s current valuation of AGL Energy’s stock given these factors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.