It has been a tough year for ASX utilities stock LGI Ltd (ASX: LGI).
LGI designs and installs biogas extraction systems. It recovers biogas from landfills and converts it into renewable electricity and saleable environmental products.
It now sits close to 52-week lows after falling over 30% this year.
Why has this ASX utilities stock fallen this year?
While the business has continued to announce new projects, the share price has retreated significantly from yearly highs.
LGI's share price has fallen in 2026 despite continued operational progress, with the decline largely driven by weaker sentiment rather than a deterioration in the business.
After a strong rally in 2025, investors have now taken profits while the broader market has become less willing to pay high valuations for growth-focused small caps.
Uncertainty surrounding Australian carbon credit prices, which influence a portion of LGI's earnings, has also weighed on investor confidence.
Some catalysts for LGI over the next 12–18 months include growth in renewable electricity generation from new projects, ACCU (carbon credit) prices and policy developments, operating margins as new facilities mature and continued contract wins with landfill operators.
What is Morgan's latest guidance on this ASX utilities stock?
Yesterday, the team at Morgans provided an updated outlook on LGI.
The broker said LGI's FY26 growth update (via social media) highlighted five newly registered carbon sites, strong ACCU creation and in-line electricity generation (130 GWh, +33% yoy), which it expects to more than offset the delayed Mugga Lane battery commissioning (now FY27, previously 2H FY26).
While we view FY26 as intact, weaker wholesale electricity and LGC prices have weighed on the medium-term earnings outlook, driving material EPS revisions (FY27 -25%, FY28 -38%) and a de-rating in the stock. Near-term earnings face ongoing headwinds from weaker commodity prices, and we expect FY27 to step back before growth resumes.
Over the medium term, we continue to view LGI positively given the material development pipeline ahead (~4x FY25) as the group scales and executes its meaningful battery rollout. BUY, A$3.10ps price target.
From current levels, this price target from Morgans indicates just over 17% potential upside.
Elsewhere, it appears experts view this ASX utilities stock as undervalued.
Four analyst forecasts via TradingView have an average one year price target of $4.11 on LGI shares.
This indicates more than 50% upside from current levels.
The post Morgans just placed a fresh buy rating on this ASX utilities stock appeared first on The Motley Fool Australia.
Motley Fool contributor Aaron Bell 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 recommended LGI Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026