On Friday, Citi analysts updated their outlook on Centrica Plc (LON:CNA:LN) (OTC: CPYYY), raising the price target from GBP1.74 to GBP1.87. The firm sustained its Buy rating on the energy company's stock. The adjustment follows Centrica (OTC:CPYYY)'s recent financial disclosures, which Citi's analysts believe showcased a robust performance across several key areas.
The analysts highlighted the company's achievements, noting Centrica delivered on shareholder returns, demonstrated efficient balance sheet management, and provided earnings visibility and stability. They also acknowledged Centrica's partial clarity on growth prospects, particularly looking forward to more details on potential nuclear investments at Sizewell and Hinkley, as well as other acquisition opportunities.
Citi's analysis underscored the attractive shareholder returns Centrica is set to provide. With a 16% guaranteed cash return in FY25, which includes a 4% dividend yield and a 12% share buyback, Centrica stands out in the sector. The analysts also pointed out that Centrica has already identified investments in gas peakers and meter assets, which could help counteract the impact of a normalization in commodity prices.
Looking ahead, Citi anticipates that further investment opportunities will contribute to Centrica's earnings. The analysts expressed optimism about the company's valuation, citing a higher net cash position, reduced pension liabilities, and the potential for value-creating investments. These factors have led to an increased 12-month price target for Centrica shares.
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