Santos shares drop 24% from their peak. Is there any upside left?

Santos Ltd (ASX: STO) shares are trading in the green in early afternoon trade on Thursday. At the time of writing, the shares are 1.49% higher for the day at $6.13 a piece.

Today’s uptick is a welcome reprieve for shareholders. Santos shares have fallen 7.5% over the past two weeks, and the stock has now dropped 24% below its three-year high of $8.06 in late August. The shares are currently trading 4.59% below levels this time last year.

What has happened to Santos shares?

Santos shares fell sharply following the company’s half-year results in late August. The downturn was also driven by the collapse of a potential takeover proposal by an ADNOC-led group. 

The group dropped the takeover bid in mid-August after the process raised concerns about governance and regulatory issues.

Dwindling oil prices have also played their part in the Santos share price decline over the past few months.

Santos shares have been in the spotlight this week, again, thanks to falling oil prices. WTI crude oil prices fell earlier in the week following supply concerns, dragging down the independent oil and gas producer’s share price with it.

Overnight on Tuesday, Brent crude oil was trading at near five-year lows, down 2.7% to US$58.92 per barrel. At the time, West Texas Intermediate (WTI) oil was also trading at its lowest levels since February 2021, at around US$55.27 per barrel.

There have been a few positive developments for the company this week, though. Santos announced yesterday that it has accelerated the final repayment under the PNG LNG project finance facility, bringing the facility to a close. Santos made its final $363 million payment six months ahead of the June 2026 repayment deadline.

The company also reported that it has executed a conditional sale and purchase agreement to divest its 42.86% operated interest in the Mahalo Joint Venture to Comet Ridge Ltd (ASX: COI).

What do analysts expect from Santos in 2026?

Analysts are mostly bullish about the projection for Santos shares over the next 12 months. Data shows 9 out of 16 analysts have a buy or strong buy rating on the oil and gas producer’s shares. 

The average target price is $7.34, implying a potential 20.15% return at the time of writing. Although some are significantly more optimistic and think the share price could climb to $8.82 next year. That represents an impressive 44.49% upside from the current trading price.

UBS is one of the brokers that rates the Santos share price as a buy, with a price target of $8.10. The broker said it thinks the company could generate US$1.5 billion of net profit in FY26 and US$1.7 billion in FY28.

The post Santos shares drop 24% from their peak. Is there any upside left? 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.