It has been a bitterly disappointing year for the AGL Energy Limited (ASX: AGL) share price.
Since the start of the year, the energy company's shares have lost just over half of their value.
This leaves AGL's shares trading close to their lowest levels in over two decades.
Is the AGL share price good value now?
While the weakness in the AGL share price has been disappointing for shareholders, one leading broker believes it could have created a buying opportunity for non-shareholders.
According to a note out of Ord Minnett from late last month, the broker has upgraded the company's shares to a buy rating with a $7.55 price target.
Based on the current AGL share price of $5.79, this implies potential upside of 30% over the next 12 months.
In addition, the broker has pencilled in a fully franked 35 cents per share dividend in FY 2022. This represents an attractive 6% yield.
What did the broker say?
Ord Minnett made the move on valuation grounds. It believes that the current AGL share price implies an overall valuation less than just its retail business.
In fact, it feels its valuation has dropped so much it could make it a takeover target. Though, the broker notes just for the retail business and not the less attractive power generation assets which are being spun off next year.
But who would buy the retail business? Ord Minnett has suggested that Telstra Corporation Ltd (ASX: TLS) could be a potential suitor.
The broker commented: "Telstra has expressed interest in growing its energy retailing business and we see substantial synergies between the largest telco company and the second-largest energy retailer."
It believes Telstra's extensive reach would help AGL grow in markets where it has a limited presence, such as Western Australia.
This could make the AGL share price one to watch in the coming months.
