AGL Energy's 1H profit of $87m was a miss compared to Morgan Stanley's forecast due largely to outages and volatility, though the broker liked the quality of the Customer Markets result.

The analyst is encouraged by management's confidence in refinancing debt and in the reversal in negative working capital. 

Rather than focus upon the past result, the broker prefers to highlight the implied normalisation of the 2H earnings run-rate and electricity forward curves leading into FY24. These measures suggest an uplift of around $14/MWh.

The target falls to $7.77 from $8.01. Equal-weight. Industry View: Cautious.

Sector: Utilities.

Target price is $7.77.Current Price is $7.12. Difference: $0.65 - (brackets indicate current price is over target). If AGL meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2023 Acquisdata Pty Ltd., source FN Arena