Santos Shares: Firetrail Analysts See Undervaluation Amid Positive Momentum

2 min read | January 15, 2025 11:33 AM AEDT | By Team Kalkine Media

Santos Shares: Firetrail Analysts See Undervaluation Amid Positive Momentum — Image source: Shutterstocks

Santos' Recent Performance and Dividend Yield

2024 Recap: Despite ending 2024 down 12.1%, Santos provided a buffer for investors with 46 cents per share in dividends. At its current price, Santos offers a 6.4% unfranked trailing dividend yield.
Recovery Since December: Shares have climbed 12.3% since December 19, 2024, aligning with a 10.7% rise in Brent crude oil prices, now trading at US$80.71 per barrel. The strength of the US dollar has further amplified gains in Australian dollar terms.

Firetrail’s Perspective: Optimism on Cyclical Commodities

Firetrail’s December High Conviction Fund update highlighted an overweight position in Santos, citing constrained supply in the commodities market. The late-2024 rally in Santos shares, supported by stabilizing oil prices and a 12-year gas supply deal with a Japanese customer, made the stock a top contributor to the fund’s returns for the month.

While Santos underperformed global energy peers over 2024, Firetrail remains confident in the stock's potential, driven by its growth projects and increasing production capacity.

Growth Projects and ESG Initiatives

Firetrail praised Santos for its progress on key projects:

Barossa and Pikka Projects: The Barossa offshore project is 84% complete, while the Pikka project in Alaska has reached 70% completion. Both are expected to come online in 2025 and 2026, boosting production by 30% and cash flow even further.
Carbon Capture and ESG Commitments: Santos delivered 1.7 million tonnes per annum at its Moomba Carbon Capture and Storage plant, demonstrating its commitment to achieving net-zero emissions by 2040.

Looking Ahead

Firetrail remains bullish on Santos’ outlook, citing stabilizing oil prices, growing production, and continued focus on sustainability.

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