Centrica, the owner of British Gas is firmly in favour with US bank Citi, which has reiterated its buy recommendation ahead of what it says are four big catalysts coming up.
Thursday sees the first of these potential shots in the arm with an LNG teach-in focused on the sustainability of earnings from its trading arm (EM&T).
Next, regulator Ofgem’s underlying profit [EBIT] margin review also can structurally uplift Centrica’s energy supply remuneration.
Citi also expects the next trading statement to highlight robust retail profits due to a clawback of past costs, while, fourthly, first-half results might see a further £500mln cash return.
“In our view, the Centrica shares are cheap, with the prospect of c.20% from its market cap being returned over 18 months, currently trading on an unchallenging one-year forward 5x P/E and 2x EV/EBITDA”.
Shares rose 1.3% to 119.1p.