The AGL Energy Limited (ASX: AGL) share price is outperforming the S&P/ASX 200 Index (ASX: XJO) today amid one top broker raising its price target significantly on the ASX utilities share.

The AGL share price is $8.94 in early afternoon trading on Wednesday, up 1.13%.

Meanwhile, the ASX 200 is down 0.5%.

As reported in The Australian today, UBS has raised its share price target on AGL by 19% to $9.60.

A price target is a broker’s estimate of where an ASX share will be trading in 12 months’ time.

The new price target implies a potential upside of 7.4% over the next 12 months.

What’s the latest with the AGL share price?

It’s been one hell of a slog for AGL shares investors in recent years.

The stock has lost almost 60% of its value over five years, while the ASX 200 has climbed almost 20%.

That’s really tough to watch.

But big fluctuations in the share price are to be expected when a company is going through turmoil.

To recap, AGL generates and retails electricity and gas for residential and commercial use.

Last year, AGL’s previous management wanted to divide the company in two. It planned to siphon off AGL’s coal power stations and other high-carbon assets into a separate company.

A shareholder revolt followed, led by environmentalist and entrepreneur Mike Cannon-Brookes.

In 2023, the AGL share price is doing better, up 10.7% in the year to date.

What’s new with the company?

AGL is among the first ASX 200 companies forced to begin a significant business restructure to meet the challenges of global decarbonisation.

The world wants cleaner energy supplies, and meeting that demand is going to cost AGL a lot of money.

It’s hard to make a profit in such difficult times.

The last piece of price-sensitive news out of AGL was in February when it reported its 1H FY23 results.

The company revealed a 55% fall in its underlying net profit after tax (NPAT) to $87 million.

Argh, so painful.

AGL also reported a statutory loss of $1.08 billion, including $706 million of impairment charges (after tax) due to its accelerated decarbonisation plan.

But my Fool colleague Tristan points out that the price/earnings (P/E) ratio now looks quite low based on where the AGL share price is today.

He says he wouldn’t be surprised if the AGL share price rises by at least 20% over the next 15 months.

Plus, higher electricity prices could lead to improved dividends for long-suffering shareholders in FY24 and FY25.

AGL insiders also appear to be optimistic. Why else would nine directors be topping up their AGL shares?

The post Top broker upgrades AGL share price by 19% appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 300 shares just upgraded by top brokers
• Should ASX 200 investors sell in May and go away?
• 5 things to watch on the ASX 200 on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday
• 4 ASX 200 directors buying and selling their company shares in the past week

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in James Hardie Industries Plc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PointsBet. The Motley Fool Australia has recommended PointsBet. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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