Although it has pulled back on Friday, the Woodside Petroleum Limited (ASX: WPL) share price has been on fire in 2022.
Since the start of the year, the energy producer's shares have risen over 20%.
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Can the Woodside share price keep rising?
The good news for investors is that one leading broker still believes the Woodside share price can rise further.
According to a note out of Morgans, this morning the broker has retained its add rating and put a $30.35 price target on its shares. Based on the current Woodside share price, this implies potential upside of 10% for investors over the next 12 months.
In addition, the broker is expecting a $1.29 per share dividend in FY 2022. If you include this, the total potential return increases to an even more attractive 15%.
What did the broker say?
Morgans was impressed with Woodside's full year results, which came in well ahead of its expectations.
It commented: "WPL posted FY21 underlying NPAT of US$1,620m (+262% pcp), close to our estimate of US$1,568m but beat consensus of US$1,412m by a handsome +18%."
But the real reason the broker is bullish on Woodside is its impending merger with the petroleum assets of BHP Group Ltd (ASX: BHP).
The broker explained: "While merger completion is still ~4 months away, we maintain the conviction view that this transformative deal will vastly enhance WPL's fundamentals and represents material valuation upside risk to current consensus. It will be interesting to see how quickly WPL sinks its teeth into BHP's growth assets, especially with its large Trion field in the southern Gulf of Mexico due for FID around mid-2022."
And while Morgans notes that the Woodside share price has risen strongly this year, it still sees room for it to keep rising. In fact, it suspects it could even go beyond its price target.
Morgans concludes: "The recent rise in WPL's share price has, in our view, been the unfolding of a 'catch up' re-rating. Something we have been expecting since WPL/BHP announced the merger and Brent oil pushed through $80/bbl. We expect WPL to make further ground on our $30.35 target price, which still faces further upside risks as the merger progresses and upcycle extends. We maintain our Add rating."
