Morgan Stanley sees less discounting for electricity in the early stages of FY24 compared to muted discounting in FY23, and a low chance of a return to aggressive discounting given the concentrated industry structure.

Bill increases of more than 18- 25%, with 50% increases not uncommon, have been noted from some of the broker's data sources. 

The analysts see near-term earnings growth for both Origin Energy and AGL Energy.

The target for AGL Energy rises to $11.88 from $11.38 on a rise in forecast retail margins and a regular mark-to-market for energy and certificate prices, as well as for the risk-free interest rate.

Equal-weight rating. Industry View: Cautious.

Sector: Utilities.

Target price is $11.88.Current Price is $11.21. Difference: $0.67 - (brackets indicate current price is over target). If AGL meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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