Shares in Centrica (LON:CNA) have advanced in London this morning as analysts at JPMorgan lifted their stance on the British Gas owner. Proactive Investors reports that the broker sees the British Gas owner’s dividend as safe for now.
As of 10:09 BST, Centrica’s share price had added 1.71 percent to 145.45p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.49 percent higher at 7,724.42 points. The group’s shares have lost more than a quarter of their value over the past year, as compared with about a 2.5-percent gain in the Footsie.
JPMorgan lifts stance on Centrica
JPMorgan Chase & Co lifted its rating on Centrica from ‘neutral’ to ‘overweight’ today, claiming that the group’s dividend looked safe for now. The analysts further hiked their price target on the shares from 150p to 180p.
“Our refreshed base case estimates point to a more stable set of credit metrics and FCF [free cash flow] profile,” the broker’s analyst Christopher Laybutt wrote, as quoted by Proactive Investors, adding that as a result, JPMorgan had removed a dividend cut from its estimates.
Group to benefit from commodity prices
The analyst and his team further reckon that that the recent rise in commodity prices will also boost Centrica in coming years, while they feel the impact of the price cap, which they expect to come into force early next year, has already been priced in to the shares.
The comments are a boost for Centrica after Morgan Stanley recently lowered its rating on the British Gas owner, pointing to a changing landscape in North America, where competition is rising and volatile power prices could create a near-term headwind for the group, which, unlike peers, no longer has a power generation hedge.