At market close, the energy generator’s share price is down 2.95%, trading at $7.23. Early it hit an intraday (and 17 year!) low of $7.15.
While the company has not made any price-sensitive announcements for a month, there have been a couple of news events that may have affected AGL shares.
Let’s take a closer look.
The AGL share price is down in the dumps
One explanation for AGL’s devastating day could be spillover from competitor Origin Energy Ltd‘s (ASX: ORG) market update.
Origin shares are trading 7.4% lower presently to $4.13 each. The spark for this fall was a bleak outlook Origin gave the market this morning. The company expects underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) for FY22 to “materially fall” to somewhere between $450 million and $600 million.
Origin CEO, Frank Calabria, said
FY2022 presents challenges for the Energy Markets business, and we are responding by targeting significant capital and operating cost savings, including from the introduction of the Kraken platform and new low cost and more efficient retail operating model, with customer migrations to the new platform continuing to progress very well.
As Mr Calabria’s comments on Origin’s challenges refer to the whole sector, not just his company, investors may be extrapolating his comments to AGL. This could explain the downturn in the AGL share price.
Last month, along with a demerger announcement, AGL declared its expected EBITDA to come in at the low end of a previously announced guidance of $1.6 billion to $1.8 billion. It also said it would suspend its special dividend program of paying 25% of underlying profits for the next 2 years.
AGL shares are down 11.4% this month.
Also, brokers at Credit Suisse recently downgraded their AGL share price outlook to $6.70 while retaining an underperform rating.
AGL share price snapshot
Over the past 12 months, the AGL share price has decreased 57.6%. Year-to-date it is down 40.8% and over the last 5 years it’s 64.8% lower.
AGL Energy has a market capitalisation of $4.6 billion.