British Gas owner Centrica PLC (LSE:CNA) ticked higher after analysts Jefferies said the recent weakness in the share price has been overdone with all its key operational metrics expected to rise this year.
The US bank said it has upgraded forecasts this year for underlying profits/earnings forecasts by 4%/3% on the assumption of marginally higher nuclear power output, gas consumption volumes and commodity prices compared to August.
Jefferies adds that potential UK nuclear plant life extensions and updates on capital allocation will be key catalysts in the coming 3-4 months.
In particular, Jefferies attributes the recent weakness in the share price to a lack of visibility on how the management will capitalise on Centrica's balance sheet headroom (more than £2bn net cash on average across FY24-27 estimates the bank) to generate value for shareholders.
Jefferies wants clarity with the full-year results next February and it sees scope for further buybacks, especially in the absence of any significant update/progress on the big infrastructure opportunities previously flagged.
'Buy' with a price target of 150p is the investment view.
Shares rose 1% to 118p.