Jefferies reiterates 'buy' on Centrica but concedes downside risks to consensus view
Analysts at Jefferies reiterated their buy recommendation and 165p target price on shares of Centrica following the energy's supplier's latest interims, even as they conceded that several aspects of the group's results "implied" downside risks to consensus estimates for its earnings per share in fiscal year 2018.
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Those weak points included the slower-than-expected recovery in its North America business, weak first half numbers for its Distributed Energy and Power unit and negative weather impacts.
Regarding the DE&P arm, Jefferies labeled its performance "disappointing", adding that E&P production for the full-year was likely to come in at the lower end of Centrica's range for between 50 to 55 million barrels of oil equivalent as a result of the ouatge at Morecambe.
"At first glance, applying a similar run-rate for 2H18 for NA Business and DE&P, combined with a higher tax rate, could imply 10% downside to FY18 consensus EPS."
On the flip side, the broker hailed what it termed "encouraging progress" at the firm's Connected Home arm, where cumulative Hub customers reaching 1.0m, together with a 29% improvement in revenues per user.
Centrica had also confirmed its fiscal year targets for a dividend payout of 12p per share and £2.1-2.3bn in adjusted operating cash flows.
It was also making progress on increasing its efficiency and was on track to deliver £200m-worth of savings.