The Woodside (ASX:WPL) share price is a buy: broker

One top broker thinks that the Woodside share price is a buy.

| More on:
A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Woodside share price is rated as a buy by the broker Morgans
  • Geopolitical tensions and the COVID recovery are sending the oil price higher
  • Woodside just revealed a result which showed a much stronger profit and larger dividend

One of the leading brokers that looks at ASX shares thinks that the Woodside Petroleum Limited (ASX: WPL) share price is a buy.

Morgans reckons that the business has more upside even though it has already risen by 26% this year.

It has been a crazy couple of years for Woodside.

Just under two years ago the business was tanking as COVID impacts caused a lot of the world's vehicles and planes to limit their movement.

But not only is the world recovering strongly from COVID effects, but the war going on between Russia and Ukraine is sending the oil price even higher. It has soared above US$100 per barrel on concerns about what the flow-on effects will be for oil supply and the oil market in general.

There may be questions about what these higher oil prices mean for the inflation picture, but for Woodside, the market seems to think it will benefit the company with the Woodside share price climbing 14% in this month alone.

Why is Morgans positive on the business?

Morgans noted that the recent Woodside result showed that underlying profit was a bit stronger than expected.

For readers that didn't catch that result, Woodside reported that net profit after tax (NPAT) jumped 149% to $1.98 billion, whilst underlying NPAT surged 262% to $1.62 billion. Operating cash flow increased 105% to $3.8 billion.

Woodside's realised price was $60.3 per barrel of oil equivalent compared to a unit production cost of $5.3 per barrel of oil equivalent.

The board decided to declare a fully franked final dividend of US$1.05 per share, bringing the full-year dividend to US$1.35 per share.

Morgans also thinks that the merger with BHP Group Ltd's (ASX: BHP) business will be very helpful for Woodside.

Some of the positives of the merger will mean creating a global energy company which would have the cash generation and balance sheet strength to deliver shareholder returns through economic cycles, opportunities to realise ongoing synergies and greater capacity to participate in the energy transition.

Woodside share price target

Morgans thinks it is a buy, with a price target of $30.35.

Based on the projections for FY22, Morgans thinks that Woodside shares are valued at 11x FY22's estimated earnings with a projected grossed-up dividend yield of 6.5%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Miner looking at a tablet.
Resources Shares

Should I buy Pilbara Minerals or Mineral Resources shares? Here's Macquarie's take

Mineral Resources and Pilbara Minerals shares are both down more than 60% in a year, but Macquarie forecasts a big…

Read more »

Miner looking at a tablet.
Resources Shares

Does Macquarie rate Fortescue shares a buy, hold or sell?

Down 42% in a year, does Macquarie think Fortescue shares are now a good buy?

Read more »

Cheerful businessman with a mining hat on the table sitting back with his arms behind his head while looking at his laptop's screen.
Resources Shares

Rock solid: How have mining and metals shares fared in 2025?

Who is leading so far?

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price slides despite significant reserves growth

An 89% resources upgrade hasn’t boosted Mineral Resources shares today.

Read more »

Copal miner standing in front of coal.
Resources Shares

How much upside does Macquarie tip for New Hope shares?

A softer-than-expected quarter has impacted the broker's view.

Read more »

2 people at mining site, bhp share price, mining shares
Resources Shares

Rio Tinto share price pushes higher on $1.4 billion lithium agreement

Rio Tinto shares are gaining major lithium exposure.

Read more »

Miner looking at a tablet.
Resources Shares

Up 73% since April, why Mineral Resources shares could keep charging higher

A leading expert says that Mineral Resources shares remain ‘heavily undervalued’. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »