Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Final hours: unlock premium data with Claim 60% OFF
British Gas owner, Centrica, close to fair value, time to take profits
Published Sep 27, 2023 10:46
Updated Sep 27, 2023 11:10
© Reuters British Gas owner, Centrica, close to fair value, time to take profits
Proactive Investors - It’s time to take profits in British Gas owner Centrica (LON:CNA), according to Morgan Stanley (NYSE:MS).
Investors took the advice and shares are trading 4.1% lower at 159.40p.
The investment bank has downgraded its rating to equal weight from overweight and would switch into SSE (LON:SSE), Engie or Fortum.
It pointed out Centrica's shares have appreciated 116% over the past year and sees them now approaching “fair value.”
Morgan Stanley has a 190p price target, at which the shares would trade on 12.6x normalised 2026 estimated PE, or 9.5x once adjusting for the elevated free cash flow during 2023-2026 period.
“While we continue to see a strong, and in many divisions improving, operating environment for Centrica, we see few catalysts near term to drive further re-rating,” the bank said.
Morgan Stanley said the market has demonstrated a preference for shareholder distributions over growth investment in 2023, which in part propelled Centrica's share price.
“Although we have seen no change to this mindset so far, as we look into 2024 we think this debate could evolve if investors re-engage with the renewables sub-sector and/or yields start to decline.”
“In such a scenario, we would expect a rotation out of Centrica and into more obvious growth stories, preferring SSE in the UK,” it added.
The downgrade comes a day after analysts at Liberum put a sell rating on Centrica, arguing that all the good news and recent self-improvement are now in the price.
The broker put a 150p price target on the stock.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.