Santos shares have 'lagged the oil price': Is now the time to buy?

Could this ASX energy share be in the buy zone today?

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If you haven't noticed the rising fortunes of ASX oil and energy shares in recent months, no doubt you would have felt the impacts of a rising oil price at the bowser. Many ASX oil shares have exploded in value recently. But Santos Ltd (ASX: STO) shares have arguably lagged behind.

That's certainly the view of Jed Richards, of investing firm Shaw and Partners.

Speaking to The Bull recently, Richards argued that Santos shares have both "lagged the oil price and sector peers".

Here are his complete remarks:

We expect crude oil prices to continue rising on the back of stronger demand and from Russia and Saudi Arabia extending cuts in oil supplies for the remainder of calendar year 2023. STO has lagged the oil price and sector peers. The company has pieced together an attractive collection of growth assets, which provide a brighter outlook.

When it comes to Santos' peers in the energy space, the company isn't leading the pack. Let's compare the Santos share price to another ASX energy share in Beach Energy Ltd (ASX: BPT).

Over the past month alone. Beach Energy shares have risen 8.3%. That compares against Santos shares' 3.74% gain over the same period. Over the last six months, the Beach Energy share price has risen by 19.4%, while Santos is up 13.9%.

But perhaps this means that it is time to buy Santos shares. After all, if Richards is on the money when it comes to global oil prices, it's entirely possible that Santos has far further to climb, particularly if it closes the performance gap with its peers like Beach Energy as well.

Why this ASX broker is recommending a buy for Santos shares

That's the view of one ASX broker anyway.

As we covered earlier this month, ASX broker Citi currently has a buy rating on the Santos share price. That comes with a 12-month share price target of $9. If realised, this could see Santos rise a robust 13.64% from the $7.92 share price we see at present.

Citi is bullish on Santos shares partly due to the company's recent sale of 2.6% of its stake in its PNG LNG operation to Kumul Petroleum. The broker reckons Santos could continue to sell assets at compelling prices, benefitting shareholders in the process.

No doubt Santos investors will like the sound of that. But we'll have to see what the company pulls out of its hat going forward.

At the current Santos share price, this ASX 200 energy share has a market capitalisation of $25.72 billion, with a dividend yield of 3.16%.

Motley Fool contributor Sebastian Bowen 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.

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