Macquarie upgrades 2 ASX 200 energy stocks; suggests strong upside

The S&P/ASX 200 Energy Index (ASX: XEJ) has dropped 1.39% at the time of writing on Friday morning. But both Ampol Ltd (ASX: ALD) and Viva Energy Group Ltd (ASX: VEA) shares are travelling in the opposite direction.

At the time of writing, Ampol shares are 0.13% higher, trading at $31.28 each. For the month, the shares are trading 4.79% higher, and they’re now 9.6% higher than this time last year.

Meanwhile, Viva Energy shares are trading 2.53% higher at the time of writing, at $2.02 a piece. Over the past month, the ASX 200 energy company’s shares have stormed 15.71% higher, but since January, the stock’s price has fallen 24.44%.

There has been no price-sensitive news out of either energy business this morning, but analysts at Macquarie Group Ltd (ASX: MQG) have written to investors about their improved outlook on both stocks.

Macquarie upgrades Ampol shares, target price raised

The broker has raised its outlook on the ASX 200 energy company’s shares to outperform from neutral. It has also raised its target price to $36, up from $32 last month.

At the time of writing, that implies a potential 15.1% upside for investors over the next 12 months.

“ALD executing well on M&A and non-refining (NZ had a tough 3Q, but improving). U-GO conversions add network resilience (but don’t all need to work successfully). Lytton ULSG project has been tough with delays and capex overruns, but ALD should now capture the cycle until its deferred FCCU turnaround (1H-2026, mainly impacting gasoline),” the broker said in its investor note. 

Macquarie has also raised Ampol‘s 2025 and 2026 estimated earnings per share (EPS) by 4% and 10% respectively, on stronger refining margins.

“Our TP is +12.5% to $36.00/sh (still based on 16x P/E rolling NTM) based on the earnings upgrades. We had hoped for a better re-entry point ahead of full year results, however with refining margins now surging into heating season we no longer expect this to occur.”

Macquarie’s revised outlook for Viva Energy shares shows robust upside

The broker has also raised its outlook on Viva Energy shares to outperform, up from neutral. It has raised its target price on the ASX 200 company’s shares to $3.20, up significantly from the $2 target price last month.

At the time of writing, this suggests a potential upside of 58.4% over the next 12 months.

“The CEXP & OTR acquisitions have disappointed on earnings runrate, high site conversion costs, progressive loss of tobacco business & culminating with head of C&M resigning. Market appears to be ignoring refining leverage that still exists at Geelong (far more material in an upcycle than C&M’s incremental growth could have been in same period),” the broker said.

Macquarie has raised Viva Energy’s estimated EPS for 2025 and 2026 by 17% and 33%, respectively, based on stronger refining margins.

“Our TP is +60% to $3.20/sh, factoring the earnings as well as a target P/E expansion (14x rolling NTM, was 12x), reflecting healthier cashflow and balance sheet (refining windfall helps to accelerate post-OTR deleveraging).”

What else did the broker have to say about the ASX 200 shares?

Macquarie’s analysts said that the refined product markets are tight, with constrained Russian product supply, relatively low inventories (particularly diesel), and surprisingly solid demand. 

They added that net capacity additions have slowed down versus recent years, given that major capacities are now in service, and China exports appear constrained. 

The analysts also commented that Russian sanctions and increased Ukrainian drone attacks are driving the risk premium. Some drivers, such as high refinery outages, are likely to be temporary, while others, like reduced Russian exports, are likely to be more structural.

The post Macquarie upgrades 2 ASX 200 energy stocks; suggests strong upside 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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.