Berenberg lowers target price on Energean

Analysts at Berenberg raised their target price on exploration and production outfit Energean from 1,540.0p to 1,750.0p on Friday, stating the group was delivering on both production and dividends.

Berenberg said Energean's first-half results highlighted operational and financial performance below consensus expectations but, importantly, also confirmed first gas from its Karish development in Israel was imminent.

As a result, Energean raised medium-term guidance by 25%, and confirmed its maiden dividend payment a quarter ahead of schedule.

"Energean is likely to increase the minimum $1.0bn cumulative dividend by the 2025 target, in our view, supported by FCF of $1.75bn – even assuming full repayment of the 2024 bond," said Berenberg.

The German bank stated that Energean remained "differentiated from the sector" by its contracted pricing, long-term visibility and covered dividend, and also said offered net asset value upside through near-term drilling activity.

"On our updated forecasts, the shares are trading on FY 2023 EV/EBITDA of 3.3x; EV/DACF of 3.8x; an FCF yield of 21% and a 7% dividend yield," concluded Berenberg, which also retained its 'buy' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com