Australian energy stocks have had a slow start to 2026. Higher operating costs and continued regulatory risk have put shares in Australian energy majors, AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG), under continued pressure.
At the close of the ASX on Thursday afternoon, AGL shares were 0.46% lower at $8.67 and down 6.97% for the year to date.
Meanwhile, Origin shares also closed lower for the day. The stock fell 0.36% to $11.02, and is now 4.17% lower for 2026 so far.
While neither stock is on fire right now, one of these energy shares looks like a much better buy than the other.
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Are Origin Energy shares a buy for 2026?
Analysts appear to be neutral about Origin Energy shares over the next 12 months.
Origin Energy is a leading provider of energy to homes and businesses throughout Australia and is involved in electricity, natural gas, solar, and LPG. The company's key operating segments include exploration and production, generation, renewable energy, and selling energy.
The company has a stable LNG production and earnings outlook and plans to expand its energy storage to facilitate greater renewable energy use in Australia.
According to TradingView data, most analysts (7 out of 12) have a neutral rating on Origin Energy shares. They do expect the share price to increase this year, though. The maximum 12-month target price is $14.10, which implies a potential 27.95% upside for investors at the time of writing.
Are AGL Energy shares a buy for 2026?
Analysts are currently very bullish on their outlook for the shares of one of Australia's oldest energy providers.
The power company participates in the gas and electricity wholesale and retail markets. Its diverse portfolio spans traditional thermal power generation and renewable sources, including hydro, wind, solar, and landfill gas.
The company is also investing heavily in battery storage to help support Australia's nationwide energy transition away from coal and into renewable energy.
TradingView data shows that 9 out of 11 analysts have a buy or strong buy rating on the stock. The average 12-month target price for the shares is $11.33, implying a potential 30.65% upside at the time of writing.
But some are even more optimistic and think the share price could storm as much as $12.75 over the next 12 months. That implies a huge 47.06% upside for investors from the current share price.
The team at Ord Minnett thinks the stock is undervalued by the market and expects it could rise even higher to $13 a share. That would be a 50% increase!
The broker said that AGL has demonstrated solid momentum recently with its Tilt renewable asset sale, flexible capacity development at Bayswater, progress in its Western Australia operations, and a series of power purchase agreements (PPAs).
The broker said it sees further drivers to come from revaluation of its 20% stake in energy management platform Kaluza, a closure of Energy Australia's Yallourn power station that will push Victorian wholesale prices, and thus AGL earnings, higher, and repricing of Tomago supply contracts.
The verdict?
With stronger upside and more bullish analyst sentiment, AGL shares look like the best buy for 2026. Although Origin Energy shares are still expected to climb higher this year.
