Beach Energy Ltd (ASX: BPT) shares are storming higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $1.135. In early afternoon trade on Tuesday, shares are changing hands for $1.18 apiece, up 4.0%.
For some context, the ASX 200 is up 0.8% today.
Today's outperformance comes atop of yesterday's 4.1% gains. Those were driven by the market's positive response to the release of the company's September quarter update (Q1 FY 2026) on Monday.
Longer term, Beach Energy shares remain down 9% since this time last year. Though those losses will have been mitigated by the 9 cents per share in fully franked dividends Beach paid eligible stockholders over the 12 months. The ASX 200 energy stock currently trades on a fully franked 7.6% trailing dividend yield.
Looking ahead, however, Macquarie Group Ltd (ASX: MQG) believes this week's rally is well overdone.
While Beach Energy's quarterly revenue was materially higher than the analysts at Macquarie had expected, the broker maintained its underperform rating.
We'll look at why, and the broker's new price target for Beach Energy shares, below.
But first…
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What did the ASX 200 energy stock report?
Investors have been sending Beach Energy shares sharply higher this week after the company reported an 8% quarter-on-quarter increase in production to 5 million barrels of oil equivalent (MMboe).
And sales revenue was up 18% to $537 million.
Looking ahead, management said sales from Beach's Waitsia Gas Plant, where commissioning is nearly complete, will commence soon, adding to production and revenue for the full year FY 2026.
Why Macquarie remains bearish on Beach Energy shares
Beach's quarterly results beat most of Macquarie's estimates.
The broker noted:
Production of 5.0MMboe was in line with MRE and 0.2MMboe ahead of Visible Alpha (VA) consensus. Sales revenue of A $537m was well ahead of MRE/VA consensus on a second Waitsia LNG cargo (largely time swapped) and, to a lesser extent, a slightly better recovery in Cooper Basin (high-margin oil).
But Macquarie pointed to a potential deterioration of the company's balance sheet.
"Despite the revenue beat, net debt rose to $484m, likely reflecting the dividend and offshore Victoria drilling and abandonment work," the broker said.
"We still see further downside to Beach Energy shares in the near term," Macquarie said of its underperform rating on the stock.
Connecting the dots, Macquarie concluded:
Whilst management structure and platform has improved in recent periods, we still find BPT's valuation challenging. The continued LNG forward sales are commercially savvy but also add risk, taking earnings from the future on an already short 2P reserve life (<7 years).
Macquarie has a 12-month price target of 91 cents on Beach Energy shares.
That's 22.9% below current levels.
