Shares in Centrica (LON:CNA) have fallen deep into the red in London this Thursday as UBS lowered its price target on the stock. The move marks another hit for the British Gas owner after JPMorgan lowered its stance on the energy group, arguing that its earnings were likely to miss market forecasts and that a dividend cut was imminent.
As of 10:33 BST, the Centrica share price had given up 1.12 percent to 105.50p. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.33 percent lower at 7,446.97 points. The group’s shares have lost more than 27 percent of their value over the past year, as compared with a near two-percent gain in the Footsie.
UBS trims target for Centrica share price
UBS reaffirmed Centrica as a ‘neutral’ today, trimming its price target on the shares from 135p to 110p. Proactive Investors quoted the analysts as saying in a note to clients that the British Gas owner’s shares had fallen by 19 percent since its full-year 2018 results in February, making Centrica the worst performer in its sector in the year to date. Looking back at the numbers, however, the analysts reckon that they believe the correction is justified.
Analysts expect cash flow below target
Proactive Investors further quoted UBS as saying that they now see Centrica’s adjusted cash flow coming well below management’s target of between £2.1 billion and £2.3 billion this year. The broker noted that planned disposals would help, 2020 cashflow looked a little better, and an upside case was still possible.
The analysts, however, concluded that much still hangs on the British Gas owner’s pension review and nuclear disposal, where downsides could materialise too.
Centrica is scheduled to update investors on its performance on May 13, when it will also hold its annual general meeting.