3 reasons this top broker just upgraded the Woodside share price

One broker has revised its outlook on the energy giant's shares.

| 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

sdf

Key points

  • Woodside shares are down almost 5% in the year to date 
  • A Citi analyst has upgraded Woodside shares from sell to neutral 
  • This follows a trip to Singapore, where the analyst received management briefings 

The Woodside Energy Group Ltd (ASX: WDS) share price has declined nearly 5% in the year to date, but could it be set to rebound?

Woodside shares have fallen 4.6% from $35.44 at market close on 30 December last year to $33.82 at the time of writing. Today, Woodside shares are up 0.24%.

Let's check the outlook for the Woodside share price.

What's ahead?

Citi has lifted the price target on Woodside shares to a "neutral" from "sell".

Head of Energy James Byrne has upgraded Woodside following management briefings in Singapore, the Australian Financial Review reported.

He cited three reasons for the upgrade. Firstly, he is positive Woodside can deliver on crucial milestones for the company's Senegal oil project. Byrne visited the shipyard constructing the production vessel, the publication noted.

Secondly, Byrne's concerns about the impact of the federal government's Petroleum Resources Rent Tax on Woodside have been alleviated.

In an announcement on 7 May, the federal government advised of changes to tax for LNG offshore gas projects. There will be a 90% cap on income that can be offset by deductions from 1 July 2023, in effect meaning "the offshore LNG industry pays more tax, sooner".

However, the changes are "better than feared", Byrne said in comments cited by The Western Australian and could leave Woodside "largely unscathed", the publication noted.

Thirdly, Byrne noted Woodside management has new confidence it can sell down the Scarborough offshore gas project amid more regulatory certainty, the AFR reported. The project received primary approvals in 2022 but is still awaiting secondary approvals.

Citi's price target is now $32 according to the publication, which implies a slight downside on the current share price.

Woodside's Scarborough and Pluto Train 2 project construction is now "30% complete" and construction of key offshore and onshore infrastructure is ramping up, Woodside said in quarterly results at the end of April.

The company's total quarterly production for the first quarter ended 31 March fell 9% compared to the previous quarter. However, sales, revenue, and production were significantly higher than in the first quarter of 2022.

The Brent crude oil price is currently up 0.79% to US$77.01 a barrel, according to Bloomberg.

Meantime, natural gas is down 0.5% to US$2.18 per MMBtu.

Share price snapshot

The Woodside share price has returned 11% in the last year.

Created with Highcharts 11.4.3Woodside Energy Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Woodside has a market cap of about $64 billion based on the current share price

Motley Fool contributor Monica O'Shea 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 Scott Phillips.

More on Energy Shares

Copal miner standing in front of coal.
Energy Shares

What happened to Coronado Global Resources shares on Friday?

The ASX coal miner announced new funding this week.

Read more »

Gas and oil worker working on pipeline equipment.
Energy Shares

The pros and cons of buying Woodside shares this month

Is this ASX energy share a great opportunity right now?

Read more »

A miner stands in front of an excavator at a mine site.
Energy Shares

What's happening with ASX uranium stocks amid Sprott doubling investment to $200M

ASX investors have witnessed share price gains of up to 30% for the largest uranium stocks this week.

Read more »

Workers inspecting a gas pipeline.
Energy Shares

Woodside signs deal to supply Malaysian company with gas for 15 years  

It’s been a good month for Woodside shareholders with the company’s stock gaining 17%.

Read more »

Excited couple celebrating success while looking at smartphone.
Energy Shares

This ASX 200 uranium stock is charging higher on big news

This uranium producer is delivering the goods. Let's see what it announced.

Read more »

A man looking at his laptop and thinking.
Energy Shares

What did Macquarie make of the Santos takeover offer?

Is this a good deal for shareholders? Let's find out.

Read more »

A man wearing glasses and a white t-shirt pumps his fists in the air looking excited and happy about the rising OBX share price
Energy Shares

Guess which ASX 300 mining stock is surging 11% on big news

There are a couple of reasons behind this strong gain.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Energy Shares

3 ASX uranium stocks up more than 20% in 2 days

Paladin Energy, Boss Energy, and Deep Yellow shares are among the market's fastest risers again today.

Read more »