Origin Energy Ltd (ASX: ORG) shares have been on form in recent weeks.
So much so, the energy giant's shares are up almost 8% since this time last month.
Let's see if Macquarie Group Ltd (ASX: MQG) thinks this strong form can continue.
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What is Macquarie saying about Origin Energy?
Macquarie notes that energy markets have been performing better than expected despite a weak month in June. It explains:
Energy markets (EM) have performed ahead of expectations, albeit June was not necessarily a strong month as coal was flat and last year benefited from the wind drought. However, we increase FY26E ~$75m, reflecting better pricing outcomes. Retail performance also appears stronger, with 3Q numbers +20k wins across the markets (Kraken delivering). ORG is also doing more disconnections in markets like Vic.
And while the APLNG business is battling tough trading conditions, this is in line with expectations and is being mitigated by its energy markets performance. Macquarie adds:
APLNG 4Q25 LNG plant flows are consistent with ~130-133PJ of production, with domestic volume to shrink. ACCC report suggests confidence that the export plant can hold 530PJ pa levels. Domestic gas volume is likely to decline, the lowest source of value. The falling pricing is a drag, but with 5 dividends in FY26, the cashflow impact is not before FY27. Moreover, EM strength mitigates some of this.
What else?
Macquarie has been running the rule over Origin Energy's shareholding in the Octopus business. The good news is that the broker has lifted its valuation of Octopus meaningfully. It explains:
We have reconsidered our Octopus Energy valuation, lifting it from £9bn to £12bn, with no change in OE with the uplift associated with Kraken. Our longer-term margin assumption is now 15% higher, at +80%. Clarity on the near-term growth opportunities in retail, newly launch C&I and water/broadband may provide confidence for upgrades. As it is, the Kraken FY26E EV/EBITDA multiple is 57x, at a similar level to companies like Wisetech.
Can Origin Energy shares keep rising?
Unfortunately, Macquarie thinks that Origin Energy shares are fully valued now.
As a result, it has reaffirmed its neutral rating with an improved price target of $10.94 (from $10.12).
Based on its current share price of $11.60, this implies potential downside of 5.7% over the next 12 months. Though, this is partially offset by its estimated 5.2% dividend yield.
Commenting on its neutral rating, the broker concludes:
ORG is pricing much of the Kraken IPO into the share price already. Core assets like EM market and APLNG valuation outlook are flatter, increase is driven by better coal pricing. APLNG value is impacted by gas pricing. Octopus "land value" is unchanged as energy.
