Centrica PLC (LON:CNA) extended its recent rally today as another broker upgraded its rating for the owner of British Gas after this week’s Queen's Speech left out any mention of an price cap on energy tariffs.
Following on from yesterday’s HSBC upgrade, JPMorgan Cazenove has today raised its rating for Centrica to 'neutral' from 'underweight'.
READ: HSBC upgrades rating for British gas-owner Centrica after Queen’s Speech
The US bank also hiked its target price for the FTSE 100-listed firm to 205p from 180p, noting that “the worst case scenario was now off the table”.
In a note to clients, JPMorgan’s analysts said: "The UK general election is shaping to be a tipping point for UK supply markets, with a weakened Tory government opting for further consultation on energy market reform rather than pressing ahead with a market-wide price cap.”
They noted that in Wednesday’s the Queen's Speech, the government proposed to "extend the price protection currently in place for some vulnerable customers to more customers on the poorest value tariffs".
The analysts said they had concluded from this that the likelihood of a market-wide cap has fallen.
But spectre of price regulation still hangs over the industry
However, though some relief is warranted, they also cautioned that there is a caveat in that the spectre of price regulation still hangs over the industry, with regulator Ofgem exploring further options to help the energy market "work better for all consumers".
In addition the analysts pointed to the fact that competition is gathering pace, with the likes of Engie and Vattenfall entering the UK energy market in recent months.