STO has traded sideways for over 3 ½ years, begging the question of why 2024/5 will be any different. The company’s result disappointed last month, seeing the stock quickly retreat towards $7, although the whole sector struggled. After failing to agree on a merger deal with WDS earlier this year, the $22.8bn oil and gas company has garnered some further takeover speculation, with Saudi Arabia and the UAE touted as potential suitors. We cannot rule out the possibility of a foreign takeover of the Adelaide-based producer 7-months after the mooted $80 billion merger with WDS, but it’s not reason alone to buy the stock. STO is not new to the takeover arena, with Brookfield also having made an unsuccessful $14.4 billion approach for the company back in 2018.
- The ASX energy stocks have significantly underperformed their overseas peers, raising the prospect of stock or cash/stock bids.
- We still have no catalysts to buy STO, and a test of $6 cannot be ruled out.
MM is neutral at best towards STO
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