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Investing.com - RBC Capital downgraded Santos Ltd. (ASX:STO), a $16.4 billion market cap energy company, from Outperform to Sector Perform and set a price target of AUD7.50. The stock is currently trading near its 52-week high after posting a strong 23.5% gain year-to-date.
The rating change follows Santos’s second-quarter 2025 results, which showed revenue exceeding RBC’s forecast while production remained in line with expectations. The company maintains healthy profitability with a P/E ratio of 13.4 and generated $3.2 billion in EBITDA over the last twelve months. InvestingPro analysis reveals 8 additional key insights about Santos’s performance and outlook.
Santos has lowered the top end of its 2025 production guidance by 2 million barrels of oil equivalent due to flooding in the Cooper Basin, according to RBC Capital.
The company’s startup guidance for both Barossa and Pikka projects remains unchanged, with RBC noting potential for an early Pikka startup.
RBC cited potential risks to the completion of XRG’s non-binding, indicative acquisition proposal, which is currently in due diligence expected to conclude by August 8, as a key factor in the downgrade decision.
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