ORG was in the news this week after downgrading earnings guidance for renewable-energy startup Octopus Energy due to regulatory changes in the UK and bad weather in the 3rd quarter – what does it expect in the UK, sunshine! Origin now projects its FY26 share of Octopus earnings (EBITDA) to fall between negative $70mn and positive $30mn, a large drop from prior guidance of up to $150 million. However, the stock’s reasonable recovery from the initial sell-off illustrates the downgrade is a short-term profitability miss, not a structural collapse.
The company has already experienced a takeover attempt when a Brookfield and MidOcean consortium launched a $20 billion bid in 2023 that ultimately failed after shareholder rejection. The bid exposed the valuation gap clearly, and Origin’s share price has partially re-rated as a result. A second approach in the near term feels unlikely, but not impossible if the energy transition assets become increasingly valued by the market.
- We like ORG for its 5% fully franked yield, but the share price only looks ok value at around $12.
MM is cautiously bullish towards ORG around $12.
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