Origin Energy stock forecast: What's next for the ASX-listed energy giant after acquisition proposal?
Origin Energy (ORG) received an acquisition proposal from a consortium led by the Canadian private equity giant Brookfield Asset Management that valued the firm’s assets at AUD 18.4bn and its equity at AUD 9 a share. Shares of the Australian energy company jumped 34% on the day after the announcement.
Origin Energy (ORG) live stock price
This surge in the ORG stock price showed investor confidence that the deal will secure the required regulatory approvals to move forward.
Here we take a look at the further details about this Australian energy company, what analysts think about the proposed acquisition, and the latest Origin Energy stock forecast for 2023 and forward.
What is Origin Energy (ORG)?
Origin Energy emerged from the breakup of the energy business of an Australian conglomerate known as Boral Limited in February 2000. The company serves approximately 4.5 million customers in Australia and the Pacific region by providing them with electricity and natural gas, according to their annual 2022 report.
Origin generates money primarily from its energy retailing and wholesaling activities. It has gas exploitation operations in the Beetaloo, Cooper-Eromanga, and Canning basins in Australia. By the end of the 2022 fiscal year, the company generated total revenues of AUD 14.46bn, most of which came from the sale of electricity and gas.
The CEO of Origin Energy is Frank Calabria. He was appointed to this position in October 2016.
Origin Energy stock was listed on the Australian Securities Exchange in 2000 and trades under the ticker symbol ORG. The firm has also listed its common shares in the German, American and Swiss stock markets.
What is your sentiment on ORGau?
Origin Energy stock price history
ORG stock gained over 10% year-to-date up until 9 November, the day of acquisition offer announcement. Brookfield’s proposition boosted the stock to jump 34% on the day after the announcement, and 48% year-to-date as of 30 November.
In the past 10 years, the stock gained 18.2%, underperforming the ASX 30 All Ordinaries Index, which rose 67.4%.
The stock, however, is still far off the 2008-2011 levels. It achieved the record high of AUD 14.87 in January 2010.
Origin Energy’s latest quarterly report
Higher energy prices contributed to boosting the performance of Origin Energy compared to 2021. During the quarter ended on 30 September 2022, the company reported a 64% year-on-year jump in its Australia Pacific LNG revenues amid higher oil prices.
Average commodity prices, as recorded by the company, leaped by 71% compared to the same period a year ago and finished the quarter at AUD/GJ 17.21. Meanwhile, electricity and natural gas sales experienced 8% and 11% year-on-year jumps respectively in this favorable environment. Origin Energy commented:
Key drivers and latest news about Origin Energy
Origin Energy’s main business is the sale of natural gas and electricity. In this regard, the company’s financial results can be heavily impacted by fluctuations in the value of these commodities.
Another key factor to consider when drafting an ORG stock forecast is the company’s ability to grow its customer base in the regions it serves. Aside from its Australian and Pacific region operations, Origin Energy also owns 20% of Octopus Energy, a UK-based energy retailer.
The performance of these three economies (Australia, the Pacific, and the UK) could influence the demand for electricity and natural gas and ultimately shape the market’s baseline Origin Energy stock forecast.
If a recession hits the global economy, as some analysts expect, this could push commodity prices and energy demand lower, therefore hurting Origin Energy’s balance sheet.
If the acquisition of Origin Energy by the consortium led by Brookfield completes as expected, shareholders stand to gain from the transaction, as the private equity firm offers the highest price per share since pre-pandemic levels.
Origin Energy’s board intends to give the consortium the chance to perform the required due diligence to put forward a binding proposal expected in eight weeks from proposal date.
Based on that timeline, a binding proposal should be presented to the board before the end of January 2023. The Board intends to unanimously recommend Brookfield’s bid of AUD 9 per share if the binding offer maintains this price.
Another scenario for Origin Energy share price forecast could focus on determining what the fair value of the company might be if the deal does not go through as expected.
If the binding offer is presented and maintains the AUD 9 per share price, it would result in a 14% gain based on the market price of ORG stock as of 30 November.
Origin Energy stock forecast: Analyst commentary & predictions
According to data from Yahoo Finance, as of 30 November, the consensus recommendation for Origin Energy stock stood at ‘buy’, with 5 out of 11 analysts rating the stock a ‘buy’, one a ‘strong buy’ and five a ‘hold.
Meanwhile, the average price target of ORG stock stood at AUD 7.25 for the next 12 months, with the highest target at $9 and the lowest sat at $6.
In regards to the proposed acquisition by Brookfield, analyst Dion Hershan from Yarra Capital Management commented to Financial Review:
Credit Suisse analyst Saul Kavonic said that the deal could encounter some obstacles once it goes through the Foreign Investment Review Board (FIRB) of Australia, adding:
Origin Energy stock predictions from Wallet Investor, algorithm-based forecasting service, expected bearishness for the stock as of 30 November. Wallet Investor’s Origin Energy stock forecast for 2023 saw ORG trading at $7.26, while the site’s Origin Energy stock forecast for 2025 saw it slumping further to $6.23.
Note that analysts’ and algorithm-based ORG stock forecasts can be wrong and shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before trading, looking at the latest news, technical and fundamental analysis.
Remember, past performance does not guarantee future returns, and never trade money you cannot afford to lose.
FAQs
Is Origin Energy a good stock to buy?
According to data from Yahoo Finance as of 30 November, the consensus recommendation for Origin Energy stock was a ‘buy’, with 5 out of 11 analysts rating the stock a ‘buy’, one recommending a ‘strong buy’ and five a ‘hold’. Note that their predictions can be wrong. Only you can divide whether ORG is a suitable investment option for you.
Will Origin Energy stock go up or down?
Meanwhile, the average price target, according to Yahoo Finance data as of 30 November, stood at AUD 7.25 for the next 12 months, with the highest target at $9 while the lowest sat at $6.
Should I invest in Origin Energy stock?
Whether you should invest in ORG should be based on your risk tolerance, investing strategy and portfolio composition. You should conduct your own due diligence on the business and its fundamentals. Past performance is not a guarantee of future results. And never trade money you cannot afford to lose.
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