Origin Energy has reiterated its strategy and lifted production guidance by 4%. However, Morgan Stanley assesses break-even gains on higher volumes are being offset by the appreciation in the Australian dollar.

Energy markets operating earnings guidance is unchanged. The broker suspects new renewables and evolving regulation will prove challenging for higher capital-cost operators such as Origin Energy.

The share price is up 23% in the current quarter, signalling a constructive 2021 oil & gas outlook but a subdued electricity forward curve, in the broker's view.

Equal-weight retained. Target is reduced to $5.55 from $5.93. Industry view: Cautious.

Sector: Energy.

Target price is $5.55.Current Price is $5.19. Difference: $0.36 - (brackets indicate current price is over target). If ORG 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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