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Morgan Stanley rates STO as Overweight

  • Jun 18, 2021 8:45 am GMT
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With climate risks growing quickly across the energy sector, Morgan Stanley assesses Santos has been more aggressive than peers laying out a plan to reduce emissions. 

It is one of three resource companies in Australia that has set Net Zero by 2040 and is leading in the energy sector. In the medium term, Scope III emissions (burning the hydrocarbons by its customers) needs to be addressed, explains the broker.

The analyst believes this could occur via hydrogen with carbon capture or via customers installing technologies like carbon capture at end use (i.e. power plants). Overweight rating is retained. Target is $8.60. Industry view: Attractive.

Sector: Energy.

Target price is $8.60.Current Price is $7.34. Difference: $1.26 - (brackets indicate current price is over target). If STO meets the Morgan Stanley target it will return approximately 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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