Origin Energy shares slump 10% this week: Buy, sell or hold?

Origin Energy Ltd (ASX: ORG) shares have slumped another 5% in Tuesday lunchtime trade, to $11.52 a piece.

Today’s decline means the shares have now tumbled nearly 10% since the ASX closed on Friday afternoon. 

For the year-to-date, Origin Energy shares are up nearly 2%, and they’re 10% higher than they were 12 months ago.

Why is everyone selling Origin Energy shares this week?

Origin Energy was one of the strongest performers on the S&P/ASX 200 Index (ASX: XJO) last week. But after the energy provider posted a March quarter update ahead of the ASX open on Monday morning, investors quickly sold off their shares.

The update, which covers Origin Energy’s Integrated Gas, Energy markets and Octopus energy segments, revealed declines across the board.

Its Integrated Gas segment saw lower production over the quarter, primarily reflecting two fewer days in the period, and natural field decline. The segment’s revenue was also down $247 million, on the back of lower realised LNG prices and the Australian dollar’s appreciation against the US dollar.

Its Energy Markets segment saw a 4% increase in sales volumes quarter-on-quarter, but a 32% decline in gas volumes, primarily due to lower trading volumes and lower gas demand for power generation.

Origin Energy’s share of Octopus Energy Group FY26 EBITDA has also been downgraded to between -$70 million and +$30 million. Guidance was previously in the $0-150 million range. Origin said emerging impacts from changes to the Energy Company Obligation scheme, higher gas capacity charges, and adverse weather in the UK in February and March have caused the guidance downgrade.

Origin Energy’s CEO, Frank Calabria, said:

Global commodity markets have experienced significant volatility this quarter, with the conflict in the Middle East affecting oil and LNG supply. Changes in oil prices have a lagged effect on Australia Pacific LNG’s long-term export contracts, and we do not expect this to flow through to results until FY27.

Are the shares still a buy? Or is there more downside ahead?

Data shows that brokers are neutral about Origin Energy shares. 

At the time of writing, TradingView data shows that three out of 10 analysts have a hold rating on the ASX energy stock. Another three have a sell or strong sell rating, and the final four have a buy or strong buy rating.

The average target price is $12.58, which implies a potential 8% upside at the time of writing. But some think the shares could drop 5% to $11.07, and others are more bullish and expect the energy provider’s shares could jump 21% higher to $14.10 a piece.

With lower EBITDA expected this year and the potential for oil and LNG headwinds to continue trickling through into FY27, I expect we could see some more downside ahead for Origin Energy shares this year. 

The post Origin Energy shares slump 10% this week: Buy, sell or hold? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.