The Woodside Energy Group Ltd (ASX: WDS) share price could be good value following its merger with the petroleum assets of BHP Group Ltd (ASX: BHP).
That's the view of one of Australia's leading brokers.
What is being said about the Woodside share price?
According to a note out of Morgans from this morning, the broker has been looking over the merger of its operations with BHP's petroleum assets.
The good news is that its analysts believe this combination is a winning one and greatly enhances fundamentals.
And while the broker feels the immediate impact on its value is broadly neutral (due to the issue of shares to BHP shareholders), it still sees upside in the current Woodside share price.
The note reveals that Morgans has retained its add rating with a price target of $32.90. This implies potential upside of 9.3% over the next 12 months.
But it gets better with the broker forecasting an FY 2022 dividend of approximately $2.56 per share. This equates to a yield of 8.5% at today's Woodside share price.
Morgans commented:
A well-timed deal enlarging WDS' earnings at a time of active investment in new growth. WDS had already expected to protect its shareholder returns post merger, however the earnings growth delivered by the cycle has now positioned the company also for a potential buyback and/or special dividend at its August result.
Post the merger with BHP Petroleum we maintain our Add recommendation with a $32.90 target price. We view WDS as ideally positioned to generate high quality earnings, maintaining its leverage to the continuing upcycle in oil & gas, tackle its diversified growth profile to unlock more value upside and potentially deliver a shareholder return surprise at its next result.
