Centrica PLC (LSE:CNA) has received a hefty upgrade from analysts are UBS, who argue the British Gas owner has held its own during the current energy crisis and balance sheet concerns should start to ease.
The Swiss bank has raised its price target to 75p from 54p and says while there will be costs from the energy chaos, competitors have been hurt a lot more and in the longer run Centrica's position will improve a lot.
Other boosts include a lift to its UK nuclear power stake from higher electricity prices while rising bond yields and oil and gas disposals should ease some of the debt and pension burden worries.
Centrica boss warns high gas prices could be with us for two years
A triennial pension review is due to close this year (2022) and this should go some way to resolving the uncertainty over the deficit, UBS believes.
Risks remain over how the government will deal with the impact of the energy crisis and first-half earnings missed forecasts by some distance hence UBS's neutral rating on the shares, but the broker reckons management has done a 'great job to stabilise the business'.
“For further upside, the shares would have to price in even more supportive markets (unlikely now in our view) or future re-leveraging (where we have doubts)."
Shares today fell 1.8% to 73.1p.