A Citigroup broker has forecast earnings growth for integrated energy provider AGL Energy Ltd (ASX: AGL) between FY17 and FY21, but declining retail gross margins by the second half of FY19.
AGL Energy opened today at $21.50 down from yesterday's close of $21.57 and is $21.22 at the time of writing after 12-months of downward share price movement with a small correction noted after the release of strong half-year results in early February.
The Citi broker notes AGL Energy has now matched Alinta's headline discount of -28% in Queensland as the company tries to compete on price to protect market share.
The broker forecast earnings growth rates for FY17 to FY21 would rise from 6.5% to 9.4%, but expects retail gross margins to decline by 300 basis points to about 10% by the second half of FY19.
AGL reported a statutory profit rise of 91% to $622 million for the half-year ended December 31, 2017, with underlying profit up 27% to $493 million and dividends up 32% to 54c per share and 80% franking payable on March 26.
