The Ampol Ltd (ASX: ALD) share price is in the red this afternoon, trading 1.21% lower for the day at $26.89.
The petroleum refiner and distributor's share price is 19.54% lower for the year. It suffered a 31% decline to $20.65 a piece over the first four months of the calendar year.
The company's share price was dented by a lacklustre FY 2024 result in February. It has also been impacted by US President Donald Trump's tariffs announcement.
Here's what Macquarie Group Ltd (ASX: MQG) thinks of the stock and its outlook.
In a recent note to investors, the broker maintained its neutral rating on Ampol shares and raised its 12-month target price to $27.50, from $23.50.
The increase represents a potential 2.26% upside for investors over the next 12 months, according to the trading price of $26.89 at the time of writing.
Macquarie attributes its target price increase to a higher H1 performance in its refining business.
Margins have been stronger than we had anticipated, and we believe reflect progress on tariffs, demand resilience in oil demand, capacity closures, maintenance season & price volatility. Now forecasting 2Q LRM of US$9.25/bbl, driving 1H Lytton EBIT estimate of $18m EBIT (previously loss-making, -$11m EBIT), and we approximately double our 2H Lytton EBIT estimate (now $65, was $34m).
As a result, the broker has also raised its earnings guidance for 2025 and 2026.
2025e EPS +9.8% due to higher refining margins (less tariff impact than we had expected), 2026 -0.4% as slightly higher refining margins were offset by slightly lower NZ and higher finance costs.
The broker also notes that there is increased potential for a possible outbound merger and acquisition.
EG Group Australia: If EG Group were to be a more motivated seller of its 500+ Australia sites, this could play into ALD's disciplined M&A program (it hasn't done a major acquisition since Z Energy in August 2021). While these aren't the best sites in industry, if acquired on a low earnings multiple this could be value accretive growth on assets that ALD knows quite well.
Macquarie also noted that there is an increased potential for a takeover of Ampol itself. Canadian multinational operator Alimentation Couche-Tard Inc (TSE: ATD) made a bid for Ampol in 2019/20 but withdrew due to COVID uncertainty.
We recognise ALD has M&A appeal, noting Couche Tard bid for the company previously.
The cessation of Couche Tard's talks with Seven & i may be significant for ALD, given ATD made a conditional, non-binding bid for Ampol in 2019.
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