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Centrica Plc

UBS cuts target price for Centrica, thinks pressure on British Gas owner’s strategy is intensifying

UBS’s analysts pointed out that the FTSE 100-listed firm’s shares have fallen by 19% since its full-year 2018 results in February, making Centrica the worst performer in its sector in the year to date

British Gas bill
But looking back at the numbers, the Swiss bank's analysts said they believe the correction is justified

UBS has reduced its target price for British Gas owner Centrica PLC (LON:CNA) as it thinks pressure on the group’s strategy is intensifying.

The Swiss bank repeated a ‘neutral’ rating on the stock but cut its target for the FTSE 100-listed firm to 110p from 135p, with the shares currently trading at 106p, down 0.7% on Wednesday’s close.

READ: Centrica plunges on dividend worries as British Gas owner warns on 2019 numbers after mixed 2018 results

In a note to clients, UBS’s analysts pointed out that the FTSE 100-listed firm’s shares have fallen by 19% since its full-year 2018 results in February, making Centrica the worst performer in its sector in the year to date.

But looking back at the numbers, they said they believe the correction is justified.

The analysts said they now see Centrica’s 2019 adjusted cash flow coming well below management's target of £2.1bn–£2.3bn.

They pointed out that planned disposals will help, 2020 cashflow looks a little better, and an upside case is still possible.

Yet, the analysts concluded, much still hangs on the group’s pension review and nuclear disposal, where downsides could materialise too.

Quick facts: Centrica Plc

Price: £0.66

Market: LSE
Market Cap: £3.81 billion
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