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Centrica share price: where now after stock rallies to four-month high?

The British energy company saw its shares rally to a four-month high after unveiling its third quarter results last week, with the stock capable of further gains, according to analysts at Jefferies.

Centrica Source: Bloomberg

Centrica has seen it shares rally 13% to 83p in the wake of its third quarter results last week which offered signs of a recovery, helping to take the stock to a four-month high.

The energy company told investors that its full-year cash flow and earnings outlook will remain unchanged, with adjusted operating cash flow to be in the lower half of the targeted £1.8 billion to £2.0 billion range and year end net debt to be within the targeted £3 billion to £3.5 billion range.

‘Our performance has been solid so far in the second half of the year and we remain on track to achieve our full year targets for both adjusted operating cash flow and net debt,’ Centrica Group CEO Iain Conn said.

‘I am encouraged by further growth in customer accounts and the recovery of business energy supply margins in North America, while we also continue to drive material levels of efficiency and maintain capital discipline.’

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Jefferies’ analysts believe Centrica’s stock could go higher

Centrica's results coming in-line with its interim guidance is a welcome respite for investors who have endured several profit warnings issued by the company since 2017.

It is unclear whether its recent performance will be replicated, but analysts at US-based investment bank Jefferies have told investors that they believe it is the ‘first step forward’ to a meaningful recovery.

Analysts at Jefferies upgraded their rating for the stock to ‘buy’ and issued a 90p price target, representing a potential upside for share price of 8%.

Centrica’s CEO announced back in July that the dividend would be cut from 12p to 5p a share. The projected dividend yield for the stock now sits at 7%, which still represents a chunky payout to shareholders, but is still a hefty cut to the 14% previously issued.

You can go long or short Centrica with IG using derivatives like CFDs.

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