Citi reiterates 'buy' on Centrica after results
Updated : 10:58
Citi reiterated its ‘buy’ rating on Centrica on Friday following a "strong" set of results a day earlier and as it highlighted the potential for further cash return to shareholders after the announced second tranche of share buyback.
The bank, which kept its price target at 120p, said it sees a further £0.5bn of cash return at 1H, taking total return to £1bn.
"We expect this to be the case even assuming a step-up of investments in a portfolio of optimization projects," it said.
"With the Ofgem EBIT review and Centrica's LNG teach-in to further improve the visibility of medium-term earnings, we see scope for further re-rating of the shares despite recent performance.
"In our view, the Centrica shares are cheap with the prospect of circa 20% from its market cap being returned over 18m, currently trading on an unchallenging one-year forward 5x P/E and 2x EV/EBITDA or 9x P/E and 4x EV/EBITDA on a normalised FY25E EPS."
On Thursday, the British Gas owner said profits had more than tripled to a record £3.3bn, driven by soaring wholesale gas prices in the wake of Russia’s invasion of Ukraine.