Jefferies believes that dividend growth at Centrica (LON:CNA) is unlikely, Citywire, has reported. The comments came after the British Gas warned on earnings and revealed an outflow of customers from its UK business.
Centrica’s share price tumbled in the previous session, shedding 15.49 percent to close at 138.00p, and pressuring the benchmark FTSE 100 index which ended the session 0.02 percent lower at 7,417.24 points. The British Gas owner’s shares have lost more than 30 percent of their value over the past year, and are down by some 41 percent in the year-to-date.
Jefferies retains ‘hold’ rating on Centrica
Jefferies reiterated its ‘hold’ rating on Centrica yesterday, with a price target of 190p on the shares. The move came after the British Gas owner warned that its full-year adjusted earnings per share expectations now stood lower than market consensus, further revealing that the number UK energy supply accounts at the end of October had reduced by 823,000 since June 30.
“2017 is on track to be another tough year for Centrica,” the broker’s analyst Ahmed Farman commented, as quoted by Citywire. “Although there appears to be a commitment to pay 12p dividend per share – similar to 2016 – the negative trajectory in earnings would disappoint many.”
The analysts further added that dividend growth looked unlikely because earnings-per-share were expected to be 26 percent lower year-on-year.
“This suggests to us that dividend growth is unlikely in 2017, and it likely to be in line with 2016 dividend of 12p. This means the stock currently trades on 7.5 percent dividend yield,” he pointed out.
Other analysts on Centrica
Kepler Capital Markets reiterated its ‘buy’ stance on the British Gas owner yesterday, with a price target of 190p on the shares. According to MarketBeat, Centrica currently has a consensus ‘hold’ rating and an average price target of 206.47p.