This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Technical Observations – For
Technical Observations – Against
Broker Jefferies (19 July) says SSE profits warning due to hot weather is a potential negative for Centrica. Sector regulation imposing retail price caps are a risk but the group is offsetting these well according to JPMorgan (6 Jun). Good half year results could give the shares a boost next week. Utilities is a defensive sector sought out in times of market uncertainty.
Risks to Centrica include harsher regulation on retail price caps, more hot weather which led peer SSE to warn on profits, fears about the sustainability of its big 8% dividend yield, poor results at the end of the month and broker downgrades.
Consensus is Bullish with 37% of brokers saying Buy and 42% suggesting Hold, supported by 79% of broker price targets suggesting upside from current levels. The average broker valuation of 159p is in-line with our short-term target of revisiting July’s highs of 165p.
Next Event: H1 Results, 31 July; Ex-dividend, 11 Oct;
Latest Broker 12-Month Consensus: 37% Buy, 42% Hold, 21% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
| Share | 1wk | 1m | 3m | 6m | 1yr | 2yr | 3yr | 4yr | 5yr |
| Perf % | -3.8 | -0.7 | 5.4 | 10.8 | -25.7 | -35.5 | -45.5 | -50.5 | -59.7 |
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Prepared by Michael van Dulken, Head of Research