Is it irrelevant, or will the Upgrade make Centrica’s share price attractive?

• The chart shows Centrica’s share price movements since May.
• AlphaValue has upgraded Centrica to a Add, with a target price at 155p
• Consensus summary: 10 Buys, 5 Holds, 3 Sells; Average target: 161.33p (Source: Bloomberg)
• Current share price is 143p (at time of writing)
• Will the shares turn back, or will the upgrade push the shares back towards 156p November highs?
• Shares -13.5% from 2018 highs; +15.5% from 2018 lows; +4% year-to date
• Source: Bloomberg, FT, Reuters, DJ Newswires

Click to enlarge

Trading Centrica – An Example

Let’s say you think that Centrica shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Centrica using a CFD, at the current price of 143p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Centrica share price rises to 156p (+9%). Your profit would be £900, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 3% from the current price. Centrica shares continue falling as a result of the downgrade, they fall 3% and hit your stop-loss. Your loss would be £300.

This is provided for information purposes only. It should not be taken as a recommendation.