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Centrica plc is an integrated energy company operating predominately in United Kingdom and North America. In the United Kingdom, it operates three segments: upstream, downstream and storage.
Investec expects 'confident and upbeat' updates from CentricaJune 08 2012, 11:00am
Analyst Angelos Anastasiou also noted that shares in the company have risen 7.5 percent in the year to date and outperformed the market by 8.5 percent in the year to date and said this trend should continue.
Investec currently has a ‘buy’ recommendation with a 429 pence per share target on the stock compared with yesterday’s closing price of 308.4 pence.
“This is almost exactly in line with the UK Utilities sector’s performance, and we believe that further outperformance is on the cards, underpinned by its exceptionally strong cash flow,” said Anastasiou.
All major suppliers announced reductions in their gas or electricity tariffs with British Gas the only company to implement the reduction immediately, making it the cheapest electricity supplier in Britain.
This, said Anastasiou, should alleviate some of the political pressure.
“Longer term, the value remains there and we still believe that we are close to reaching conclusions to the political situation that will allow this value to be unlocked,” the analyst added.
In its latest update in May, Centrica said trading had been in line with expectations as higher wholesale gas and power prices upstream offset the impact of the mild weather in the downstream business, while it had also managed to reduce costs.
In the upstream, the company has completed the Statoil and Statfjord acquisitions, adding 153 million barrels of oil equivalent for a total £1.1 billion with the completion of the Total deal expected within the next few months.
The group added that gas production is expected to increase 20 percent this year, which is slightly below previous forecasts.
Centrica is due to release its interim results in late July.