viewCentrica PLC

UBS warms to Centrica, upgrades to ‘buy’ as it predicts 25% upside in the shares

The Swiss bank said there were “significant corporate catalysts” for growth at the British Gas owner, particularly with the UK’s retail market improving

Centrica PLC - UBS warms to Centrica, upgrades to ‘buy’ as it predicts 25% upside in the shares

Shares in Centrica PLC (LON:CNA) heated up on Monday as UBS upgraded the owner of British Gas to ‘buy’ from ‘neutral’ saying they saw the potential for “25% upside” in the stock.

The Swiss bank, which also hiked its target price for the FTSE 100 energy firm to 110p from 68p, said the shares were currently trading at a 45% discount to the UK's regulated names, the firm’s British Gas services business was “undervalued” and there were “significant corporate catalysts” for growth, particularly with the UK’s retail market improving.

READ: Centrica sells Norfolk power plant for £105mln

UBS added that the upcoming change of chief executive, due this year after incumbent Iain Conn said in July he would be retiring from the firm, was “a catalyst that could lead to changes in strategy”.

While the bank noted that there was “a risk of surprises” that could prove negative to Centrica’s shares, they saw these “reducing” as a result of the company’s planned disposal of its commodity business, the improving picture for UK retail and “reduced political risk”.

“Some risks will remain (weather; competitive pricing; market share; disposal valuation) but we think it is fair to expect lower overall volatility than in the past”, UBS said.

The assessment helped lift Centrica’s shares by 1.5% to 87.1p in mid-morning trading.

Quick facts: Centrica PLC

Price: 47.85 GBX

Market: LSE
Market Cap: £2.79 billion

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...



Market Report: The FTSE sinks as travel tour operator TUI tanks

The FTSE has opened up this Thursday in negative territory as the reality of the economic impact of lockdown and fears of a second wave of COVID-19 infections hits home.  The Anglo-German tour operator TUI (LON:TUI) has posted a whopping 98% drop in revenue and a €1.1bn loss for the past...

15 minutes ago

2 min read