Santos Shares Decline to Lowest Level Since October Amid Analyst Downgrade

2 min read | October 15, 2024 04:35 PM AEDT | By Team Kalkine Media

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Key Points

Santos shares fell 1.5% to AU$7.07 following a downgrade by Macquarie.

Macquarie lowered its price target for Santos to AU$8.65 and reduced earnings estimates by 6%, 4%, and 6% for FY24-26.

Analysts expect Santos’s Q3 production to drop to 21.1 million barrels of oil equivalent, down from 22.2 MMboe in the previous quarter, with a projected 6% decline in revenue to $1.23 billion.

Shares of Santos (ASX:STO) fell by as much as 1.5% on 15 October 2024, reaching AU$7.07, marking the lowest level for the stock since October 1. This decline follows a downgrade from analysts at Macquarie, who have reduced their price target for Australia’s second-largest oil and gas producer by 1% to AU$8.65.

In addition to the price target adjustment, Macquarie analysts have lowered their earnings estimates for Santos by 6%, 4%, and 6% for the fiscal years 2024 to 2026, reflecting concerns about the company’s operational performance. Analysts expect Santos to report third-quarter production of 21.1 million barrels of oil equivalent (MMboe), a decrease from the 22.2 MMboe reported in the previous quarter. This anticipated decline highlights challenges in maintaining production levels in a competitive market.

Moreover, Macquarie predicts a 6% sequential drop in Santos's Q3 revenue, projecting it to reach $1.23 billion. This revenue forecast aligns with the broader concerns regarding production capabilities and market conditions impacting the oil and gas sector.

As of the last close, Santos’s stock has fallen approximately 5.5% year-to-date, indicating a challenging environment for the company amidst fluctuating oil prices and evolving industry dynamics.

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