AGL Energy Ltd

AGL: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$77.00	Wmkr	Csdm

AGL’s PowAR Fund Pays Through the Nose To Secure Tilt Renewables; Downgrading FVE 6%

Adrian Atkins

Mar 16, 2021

We downgrade narrow-moat AGL Energy's fair value estimate 6% to AUD 16 per share after incorporating the likely acquisition of Tilt--which appears dilutive--and lower wholesale electricity price forecasts given ongoing weakness amid a wave of new renewable supply. These factors had a roughly equal impact on our valuation. But we continue to think AGL is materially undervalued. Our bullish valuation is underpinned by our view that electricity prices will recover over the longer term as new supply slows, ageing coal power stations close and gas prices rise.

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