The market should keep appreciating the turnaround story and the earnings growth potential after last week’s trading statement showed resilience in a challenging environment, analysts at the investment bank said.
They believe Centrica can realise financial benefits with cost efficiencies in UK Home, the sale of Spirit and lower losses in Hive and DE&P.
The stock remains an ‘overweight’, with a target price of 66p from 60p previously, and upcoming catalysts such as the resumption of the dividend, an agreement with pension trustees and the announcement of medium-term targets.
“We are encouraged that the majority of players in the retail market appear to be passing through higher commodity costs to their customers in their competitive offerings, with the gap between the cheapest and most expensive tariffs remaining broadly consistent over the past few months,” analysts commented.
“The energy white paper published in December proposed the removal of supplier thresholds of ECO and the Warm Home Discount, which should level the playing field in the market.”
“Proposals to introduce more switching in the energy supply may be negative in the long run (2024+) but should promote even further discipline for the players in the market today.”
Shares rose 2% to 50.45p on Tuesday late morning.