Here's why the AGL share price is getting whacked on Wednesday

It's been a pretty horrid Wednesday for the S&P/ASX 200 Index (ASX: XJO) and ASX shares so far this session. At the time of writing, the ASX 200 has slipped by 0.96% and is back under 7,400 points. But let's talk about the AGL Energy Limited (ASX: AGL) share price.

AGL shares are faring even worse than the broader market so far today. After closing at $12.28 a share yesterday, this energy generator and retailer opened at $11.88 a share this morning, before falling even further. At present, the company is sitting at $11.70 a share, down by a nasty 4.72%.

So why is the AGL share price underperforming the broader market so conspicuously this session?

What's up with the AGL share price this Wednesday?

Well, it's not too clear. There have been no new announcements from AGL itself in more than a week.

However, there is one factor that could be behind this dramatic share price slump that we are seeing.

As reported in The Australian today, the AGL share price has just received a major downgrade from one of the ASX's most prominent brokers.

Brokers at Macquarie have downgraded AGL shares from their previous outperform rating to neutral. The broker previously had a 12-month share price target of $11.59 a share. But this has been trimmed to $11.43. If Macquarie is on the money here, AGL shares fall by another 2.5% or so over the coming 12 months.

Macquarie's analysts stated that AGL is likely to see electricity prices peak in FY2024, and will therefore be unable to "sustain FY24 earnings into FY25".

So perhaps this is getting up investors' noses today and may be why the market seems to be singling out AGL for punishment this session. But only time will tell if this ASX broker is onto something here.

Despite today's falls, the AGL share price has had a stunning run in 2023 to date. Since the start of the year, AGL shares are up a whopping 45.9%, as well as up 36.55% over the past 12 months:

At the current AGL share price, this ASX 200 share has a market capitalisation of $7.92 billion, with a trailing dividend yield of 1.53%.