Centrica share price: Jefferies remains bearish amid too many unknowns

on Jan 25, 2017
Updated: Oct 21, 2019

Centrica (LON:CNA) faces too many unknowns, analysts at Jefferies have said. The comments came as the broker reiterated its bearish stance on the British Gas owner, which updated investors on its recent performance last month, lifting its full-year earnings forecasts.

Centrica’s share price has slipped into the red this morning, having shed 0.44 percent to 224.40p as of 09:48 GMT. The stock is underperforming the broader London market, with the benchmark FTSE 100 index having inched into positive territory and currently standing 0.28 percent higher at 7,170.17 points. The shares have gained nearly nine percent over the past year, but are down by some four percent so far in 2017.

Jefferies reiterated its ‘underperform’ rating on Centrica yesterday, with a price target of 190p on the shares. The broker argues that while it knows from the group’s December update that full year earnings per share will be around 16.5p, that operating cashflow will be £2.4 billion to £2.6 billion and that the cost savings programme is on track, several unknowns remain.
“What we do not know is; (1) the impact of the prepayment price cap; (2) whether the government will intervene in 2017; and (3) whether new divisions will deliver significant value,” Jefferies’ analyst Oliver Salvesen pointed out, as quoted by Citywire.

The 18 analysts offering 12-month price targets for Centrica for the Financial Times have a median target of 240.00p on the stock, with a high estimate of 300.00p and a low estimate of 175.00p. As of January 21, the consensus forecast amongst 19 polled investment analysts covering the British Gas owner advises investors to hold their position in the company. Centrica is scheduled to unveil its preliminary results for 2016 on February 23.
As of 10:25 GMT, Wednesday, 25 January, Centrica PLC share price is 224.60p.

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