Australia's AGL Energy shares tumble after Macquarie downgrade

shares fell more than 4% on Wednesday to hit their lowest in two weeks after Macquarie downgraded Australia's top power producer to "neutral" from "outperform", citing likely headwinds to fiscal 2025 earnings.

The stock declined as much as 4.6% to A$11.710 by 0144 GMT, marking its biggest intraday drop since Feb. 9, and hitting the bottom of the ASX 200 benchmarkMacquarie also lowered its price target for the country's biggest carbon emitter to A$11.43 from A$11.59, saying a 27% jump in share price since the investor day in mid-June had "captured the FY24 growth".

"FY24 is likely to be peak electricity pricing, thus the ability to sustain FY24 earnings into FY25 is now challenged," the brokerage said in a research note. Macquarie said electricity pricing appeared to be nearing a peak, with prices starting to fall from about mid-June owing to weak coal prices and ramp-up of coal generation in Queensland and New South Wales, among other factors.

The brokerage also cut its pricing forecast by around A$5 per megawatt-hour for the 2025-2026 fiscal year, resulting in a 15.6% cut to fiscal 2025 underlying profit estimate to A$585 million , and a 15.1% cut in fiscal 2026 to A$562 million.

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