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British Gas owner Centrica oversold and set to rally, predicts Barclays

Published 15/05/2024, 15:46
© Reuters British Gas owner Centrica oversold and set to rally, predicts Barclays

Proactive Investors - Lower wholesale gas prices have taken a toll on the share price of British Gas owner Centrica (LON:CNA), but Barclays (LON:BARC) is predicting a revival even if it has cut its target.

Centrica has been one of the SX6P's [utility sector] poorer performers year-to-date notes the bank but a gas price recovery, EPS resilience, clarity on investments and buyback extension all point to that changing, says the bank.

"We see the potential for a share price recovery based on the following four themes: Gas prices are back to the levels at the start of the year, a modest current ex-cash earnings rating of 4.3 times and the prospect of a further buyback extension".

Earnings forecasts for 2024 and 2024 have been lowered along with the share price target to 190p (205p), but Barclays adds that represents 40% upside potential on the current market price.

'Overweight' is the investment rating.

Shares rose 3.3% to 144p.

Read more on Proactive Investors UK


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