AGL Energy has announced it has moved to 100% of OVO Energy Australia and will move to 20% of the Kaluza global platform via a preference share issue. AGL will invest $300m over FY24-27 to transfer its retail accounts to Kaluza, targeting cost savings of A$70-90m pa annually, starting in FY28.

Morgan Stanley will look to value AGL's Kaluza investment at cost, absent detailed financial disclosures, noting OVO and Kaluza are private companies with a history of strong growth.

Equal-weight and $9.50 target retained. Industry view: Cautious.

Sector: Utilities.

Target price is $9.50.Current Price is $10.31. Difference: ($0.81) - (brackets indicate current price is over target). If AGL meets the Morgan Stanley target it will return approximately -9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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