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

• The chart shows Centrica’s share price movements since May.
• HSBC has upgraded Centrica to a Hold, with a target price at 140p
• Consensus summary: 10 Buys, 5 Holds, 2 Sells; Average target: 159.42p (Source: Bloomberg)
• Current share price is 132p (at time of writing)
• Will the shares turn back, or will the upgrade push the shares back towards 156p November highs?
• Shares -21.7% from 2018 highs; +4.7% from 2018 lows; -3.2% 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 132p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Centrica share price rises to 156p (+18.1%). Your profit would be £1810, from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 7% from the current price. Centrica shares continue falling as a result of the downgrade, they fall 7% and hit your stop-loss. Your loss would be £700.

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