Credit Suisse says the upside for energy giant Santos has been priced into its share price, rebadging the stock as neutral.

Credit Suisse has this morning downgraded Santos (STO) to neutral from outperform despite 2012 full-year underlying profit of $600 million meeting market expectations and exceeding Credit Suisse forecasts of $550 million.

They upped their target price from $12.50 to $13.25.

The energy giant maintained its production guidance for between 53 and 57 million barrels of oil equivalent (mmboe) while announcing that first oil from Fletcher Finucane will be produced earlier than expected in mid-calendar year 2013.

"Capex guidance also remained at $4 billion while first guidance for production costs was $630 to $660 million versus our estimates of $660 million. We lower our earnings 1 per cent in full year 2013 and 6 per cent in full year 2014 due to a depreciation and amortisation adjustment that does not affect valuation,” the broker said.

Total capex guidance remained at $21.5 billion for the Gorgon LNG project and $US19 billion for PNG LNG with both projects on schedule (47 per cent and 75 per cent complete, respectively).

Given the stock is up 10 per cent in the past three months, the broker now only sees upside potential of 10 per cent to its upwardly revised target price, hence the downgrade to neutral. It also believes that Santos trades at demanding multiples, which are likely to continue until both the PNG and Gorgon projects come online in 2017.

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