Jefferies has warned that the outlook for Centrica (LON:CNA) remains challenging, Citywire reports. The comments come as the British Gas owner prepares to update investors on its full-year performance on Thursday next week.
Centrica’s share price has jumped in London this Friday, having added 1.86 percent to 128.75p as of 09:32 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having added 0.79 percent to 7,292.06 points so far this morning. The group’s shares have lost more than 45 percent of their value over the past year, as compared with about a 0.2-percent rise in the Footsie.
Jefferies sees Centrica as ‘hold’
Jefferies reiterated its ‘hold’ stance on Centrica yesterday, while trimming its price target on the shares from 155p to 140p.
“Given the 23-percent share price decline over the last three months, we refresh our risk analysis to assess the value case for Centrica,” the broker’s analyst Ahmed Farman commented, as quoted by Citywire, adding that while Jefferies believed that a 4.5-percent UK domestic retail earnings before interest and taxation margin was achievable for the British Gas owner, “the market appears to be anticipating a tougher standard variable tariff cap scenario”.
The analyst has further pointed to “ongoing customer losses, recent negative trends in commodity prices, and limited confidence in Centrica’s long-term growth strategy”.
The comments come after Jefferies cautioned in November that it believed that dividend growth at the British Gas owner was unlikely.
Other analysts on FTSE 100 group
Deutsche Bank reiterated its ‘sell’ stance on Centrica at the end of last month, valuing the shares at 125p. According to MarketBeat, the British Gas owner currently has a consensus ‘hold’ rating and an average price target of 177.43p.