Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • Jefferies’ analyst Anthony Moulder reaffirms ‘Buy’ rating on AGL Energy Ltd.

  • Target price: AUD 12.82, representing 44.37% upside from the current market price of AUD 8.88.

  • In AGL’s FY25 and FY26 guidance update, the company showed continued earnings resilience despite statutory losses.

AGL Energy Ltd (ASX:AGL) has received a vote of confidence from Jefferies analyst Anthony Moulder, who reaffirmed a ‘Buy’ recommendation for the Australian energy giant. The analyst has set a target price of AUD 12.82, implying a 44.37% potential upside from the company’s most recent closing price of AUD 8.88.

The endorsement might has come in the wake of AGL’s FY25 full-year results and forward guidance for FY26, highlighting the company’s operational progress, investment in energy transition infrastructure, and continued shareholder returns policy.

FY25 Performance Overview

For the twelve months ended 30 June 2025, AGL reported a statutory loss after tax of AUD 98 million. This included significant items amounting to AUD 596 million post-tax, driven primarily by a AUD 398 million increase in onerous contracts and AUD 87 million in Retail Transformation costs. Additionally, there was a non-cash negative movement of AUD 142 million in the fair value of financial instruments.

On an underlying basis, EBITDA came in at AUD 2,010 million, in line with guidance but down 9% from FY24. Underlying Net Profit After Tax (NPAT) was AUD 640 million, also within the guided range but 21% lower year-on-year.

Dividend Policy and Capital Management

AGL declared a fully franked final dividend of 25 cents per share, bringing the total FY25 dividend to 48 cents per share. The payout ratio for the year was set at 50% of underlying NPAT, reflecting the company’s balance between returning capital to shareholders and funding strategic growth, including the Liddell and Tomago battery projects and the Retail Transformation Program.

The final dividend will be paid on 25 September 2025.

FY26 Outlook

Management expects Underlying EBITDA between AUD 1,920 million and AUD 2,220 million in FY26, driven by improved plant availability, the commencement of operations at the Liddell Battery, and stronger customer market earnings. However, margins in the gas business are expected to tighten due to expiring supply contracts, and higher operating costs are anticipated due to inflation and growth-related investments.

Underlying NPAT for FY26 is projected in the range of AUD 500 million to AUD 700 million, with the decline from FY25 largely attributed to higher depreciation, amortisation, and finance costs from increased borrowings.