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Investing.com - CLSA has reiterated its Outperform rating and AUD9.35 price target on Santos Ltd. (ASX:STO), a $14.38 billion market cap energy company with $5.2 billion in annual revenue, despite the reported withdrawal of Adnoc’s acquisition bid for the company.
The research firm notes that Adnoc’s bid for Santos has been dropped following successive delays, a development that will likely drive short-term downside risk to Santos shares and potentially affect Woodside’s share price as well.
CLSA remains bullish on the energy sector, highlighting oil’s strength despite increasing OPEC supply as a positive signal for the global oil market.
The firm sees upside potential for Santos as the company continues to de-risk its Barossa and Alaska Pikka projects, which are expected to add 30% to production over the next 18 months.
CLSA maintains that the sequential de-risking of these projects offers more upside potential than Adnoc’s bid, which it characterized as "low." InvestingPro analysis suggests Santos is currently undervalued, with additional insights and metrics available to subscribers.
In other recent news, Santos Ltd. reported its second-quarter 2025 results, with revenue surpassing the forecasts set by RBC Capital. Despite the strong revenue performance, production figures were consistent with expectations. Following these results, RBC Capital downgraded Santos’s stock rating from Outperform to Sector Perform. The downgrade was influenced by concerns over acquisition risks associated with the company. RBC Capital also set a price target of AUD7.50 for Santos. These developments reflect the cautious stance taken by RBC Capital in light of the company’s recent activities. Investors may want to consider these factors when evaluating Santos’s future prospects.
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