It certainly has been a disappointing year for the AGL Energy Limited (ASX: AGL) share price.
Since the start of 2021, the energy company's shares have lost a whopping 50% of their value and are now trading at $6.05.
This means the AGL share price has fallen almost 70% over the last five years.
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Could the AGL share price bounce back and hit $7.50 by the end of the year?
While the market remains very divided on the AGL share price, one top broker believes value is emerging.
According to a note out of Ord Minnett from last week, its analysts have a buy rating and $7.65 price target on the company's shares.
Based on the current AGL share price, this implies potential upside of 26% for investors before dividends.
The broker has also pencilled in a 32 cents per share fully franked dividend in FY 2022. If we add this into the equation, the potential return on offer increases to over 31%.
As a result, it would appear as though the team at Ord Minnett believe the AGL share price could be trading in or around the $7.50 mark by the end of the year.
What is the broker saying?
Ord Minnett notes that the company is planning to change its name to Accel Energy and demerge AGL Australia (its retail business) as a separately listed entity via capital reduction.
The broker has been looking over the retail business and believes it would have a lot of appeal as a takeover target post-demerger. Its analysts have even suggested that Telstra Corporation Ltd (ASX: TLS) could be a potential suitor given its interest in the energy sector.
It 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."
And based on other transactions in the industry, it suspects the business could command a decent price. In fact, the broker suspects the retail business would be worth ~$10.75 per share based on current industry takeover multiples. This is significantly higher than where the AGL share price trades today.
This could make AGL one to watch in the coming months.
