Analyst tips Santos share price to surge higher

Santos shares could be a top option for investors looking for energy exposure…

| More on:
Crude oil barrels rocketing.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Santos shares have been smashing the market in 2022
  • One leading broker believes there's still plenty more gains to come
  • Morgans sees 24% upside for the Santos share price from current levels

The Santos Ltd (ASX: STO) share price has been a strong performer in 2022.

Thanks to rising oil prices, the energy producer’s shares have smashed the market with a 22% gain.

As a comparison, the S&P/ASX 200 Index (ASX: XJO) is down 6.2% over the same period.

Can the Santos share price keep rising?

The good news for investors is that one leading broker still sees plenty of upside ahead for the Santos share price.

According to a recent note out of Morgans, its analysts have retained their add rating with a slightly trimmed price target of $10.00 on the company’s shares.

Based on the current Santos share price of $8.08, this implies potential upside of approximately 24% for investors over the next 12 months.

Why is Morgans bullish?

Morgans is bullish on Santos due to its positive growth outlook and its diversified earnings base.

The broker believes this leaves the company well-placed to benefit from a sector recovery and suspects that the Santos share price could continue to re-rate to higher multiples in the coming months.

Morgans commented:

We expect the resilience of STO’s growth profile and diversified earnings base see it best placed to outperform against a backdrop of a broader sector recovery. While pre-FEED, we see Dorado as likely to provide attractive growth for STO, while its recent acquisition increasing its stake in Darwin LNG has increased our confidence in Barossa’s development. PNG growth meanwhile remains a riskier proposition, with the government adamant it will keep a larger share of economic rents while operator Exxon has significantly deferred growth plans across its global portfolio.

All in all, this could make Santos’ shares a top option for investors that are looking for exposure to sky high oil prices.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Energy Shares

‘Well progressed’ share buyback puts Whitehaven Coal shares on the front foot

Whitehaven Coal shareholders seem pleased with the company's latest announcement.

Read more »

Female oil rig worker wearing high vis vest, red gloves and hardhat smiles at camera with a green painted oil rig in the background
Energy Shares

Here’s how the Woodside Energy share price performed over FY2022

How did the ASX oil and gas company's shares go last financial year?

Read more »

Pilbara Minerals share price ASX lithium shares A stylised clean energy battery flexes its muscles, indicating a strong lift in share price for ASX energy companies
Energy Shares

Broker names 2 of the best ASX energy share to buy in FY23

These energy shares could be buys for FY 2023...

Read more »

Man in mining or construction uniform sits on the floor with worried look on face
Energy Shares

Why did the Santos share price plunge 10% in June?

Here's what may have weighed on the ASX 200 energy giant last month.

Read more »

Red arrow going down and symbolising a falling share price.
Share Fallers

Why the Paladin share price fell 25% in June

Uranium shares softened in June.

Read more »

A woman sits on sofa pondering a question.
Energy Shares

What happened to the Woodside Energy share price last month?

How did Woodside Energy shares beat the ASX 200 by 16% in June? Let's take a look.

Read more »

sad looking petroleum worker standing next to oil drill
Energy Shares

Why are ASX 200 energy shares dragging on the market today?

Oil prices are likely dragging the ASX 200 energy sector down them them on Friday.

Read more »

oil and gas worker checks phone on site in front of oil and gas equipment
Energy Shares

Santos shares go cold despite energy regulator outlining ‘crucial’ role gas will play for decades

The Australian Energy Market Operator has released a 30-year plan for investment to enable the transition to renewables.

Read more »