Morningstar says Origin Energy slightly overvalued, flags weaker utilities outlook

Origin Energy

04/08/2026 20:07

** Morningstar analysts upgrade their fiscal 2026 earnings forecast for Origin Energy's ORG.AX LNG and utilities business, but warned of a weaker medium-term outlook for its utilities business
** Morningstar notes co's comments in July that FY26 LNG production and utility EBITDA came in above the midpoint of Origin's forecasts; upgrades FY26 forecasts accordingly
** However, medium-term outlook for Origin's utility business has weakened following a roughly 20% drop in electricity futures prices, Morningstar cautions
** Co also expects output for the Australia Pacific LNG (APLNG) project in Queensland, in which Origin has a 27.5% stake, to decline to 625 PJ to 670 PJ in 2027 as older gas fields decline 
** While Origin expects APLNG output to fall in FY27 and even as costs rise to fund more drilling, Morningstar said higher LNG and oil prices should support earnings this year
** Morningstar says ORG is "slightly overvalued" on a forward P/E of 17, with a "relatively flat long-term earnings outlook"
** Stock down 4.2% YTD

 (Reporting by Shruti Agarwal in Bengaluru)
 ((Shruti.Agarwal@thomsonreuters.com;))