Berenberg lowers target price on Energean

16th Jul 2024 15:56

(Sharecast News) - Analysts at Berenberg lowered their target price on exploration and production company Energean from 1,565.0p to 1,305.0p on Tuesday following the group's disposal of assets in Egypt, Italy and Croatia.

Berenberg stated that the deal was done at a significant uplift from the price that Energean paid for the assets in 2020 of $5.40 per barrel of oil, versus $1.20 in 2020, and was positive on this basis.

The German bank, which has a 'buy' rating on the stock, noted the deal was expected to close by the end of 2024 and should also enable payment of roughly $200.0m special dividend and repayment of $450.0m of bond debt.

However, a lower overall contingent resource base means that Berenberg now models a reduced risked net asset value and price target. It also slightly tempers its medium-term dividend modelling to ensure that net debt/underlying earnings metrics remain on track to reach the company's target of 1.5x, but continue to forecast a healthy long-term dividend yield of 14%.

"Based on our pro-forma numbers, our FY25 production and revenue forecasts are down 27% and 25% respectively, with EBITDA and EPS down 23% and 22%, respectively. FY25 FCF is reduced by 31% and net debt by 9%. Our FY25 DPS is unchanged but is then flat beyond that - resulting in an 18% DPS forecast reduction in 2026 versus our previous forecasts," said Berenberg.

Reporting by Iain Gilbert at Sharecast.com