Centrica share price: Jefferies points to dividend concerns

Tsveta van Son
  • March 4th 2019, 10:19
  • Last Updated: October 21st 2019, 15:13

Jefferies has lowered its price target on Centrica (LON:CNA), arguing that the group’s dividend is ‘hanging by a thread,’ Sharecast reports. The comments came after the British Gas owner recently updated investors on its full-year performance, cautioning that the energy regulator’s price cap will impact its cash flow and earnings this year.

Centrica’s share price has been subdued in London in today’s session, having given up 0.81 percent to 122.45p as of 10:03 GMT. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.31 percent higher at 7,128.48 points. The group’s shares have lost more than 13 percent of their value over the past year, as compared with about a 0.7-percent dip in the Footsie.

Jefferies weighs in on Centrica

Jefferies, which sees Centrica as a ‘hold,’ trimmed its price target on the shares from 125p to 110p last week. Sharecast quoted the broker’s analysts Ahmed Farman, Charlote Chiew and Luca Cartechini as saying in a research report that while the British Gas owner’s credit metrics and dividend were seen as ‘borderline,’ a cut to the group’s payout was not ‘inevitable’.

“Our view remains unchanged that Centrica's dividend is hanging by a thread, but new costs and disposals mean that the balance sheet pressure is not acute enough to make a dividend cut,” the analysts elaborated, adding, however, that they also thought that a re-affirmation of the 12p-payout, “without further balance sheet and growth measures, is unlikely to get much credit from the market”.

Other analysts on FTSE 100 group

Royal Bank of Canada, which rates Centrica as an ‘underperform,’ also lowered its price target on the British Gas owner last week, from 130p to 115p. According to MarketBeat, the blue-chip company currently has a consensus ‘hold’ rating and an average valuation of 133p.

As of 10:20 GMT, Monday, 04 March, Centrica PLC share price is 122.45p.

About the author

Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a MA degree in Nordic Studies from Sofia University and has also attended the University of Iceland. While she covers a variety of investment news, she is particularly interested in developments in the field of renewable energy.

Leave a Reply

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.