Credit Suisse has lifted its price target on Centrica (LON:CNA), arguing that the group’s dividend was now more sustainable, WebFG News reports. The comments come after Jefferies recently hiked its rating on the British Gas owner, noting that industry regulator Ofgem was likely to adopt a ‘balanced approach’ when it brings in its new price cap on standard variable tariffs.
Centrica’s share price has advanced in London in today’s session, having added 1.55 percent to 160.10p as of 14:11 BST. The stock is outperforming the broader UK market, with the FTSE 100 having gained 0.56 percent to 7,551.83 points so far today. The group’s shares have lost more than 23 percent of their value over the past year, as compared with about a 1.5-percent gain in the benchmark index.
Credit Suisse lifts price target on Centrica
Credit Suisse lifted its price target on Centrica from 175p to 185p yesterday, while maintaining its ‘outperform’ rating on the shares. WebFG News quoted the analysts as saying that the group’s payout to shareholders was now more sustainable, and that the scrip dividend might end in 2019, which would be ‘a major source of upside’.
The broker reckons that the FTSE 100 group’s operating cash flow would grow at a compound annual growth rate about eight percent between 2018-20, helping ensure the dividend will be covered by cash. Credit Suisse also hiked its estimate for Centrica’s earnings per share for 2020 by about five percent to 16.9p and that for 2021 by roughly six percent.
Other analysts on British Gas owner
Deutsche Bank, which sees Centrica as a ‘sell,’ boosted its price target on the British Gas owner from 125p to 135p last week. According to MarketBeat, Centrica currently has a consensus ‘hold’ rating and an average price target of 166.82p.