JPMorgan downgrades Centrica, cites limited valuation upside
JPMorgan Cazenove downgraded British Gas owner on Monday to 'neutral' from 'overweight' and trimmed the price target to 167p from 170p, citing limited valuation upside.
"Our analysis suggests that Centrica shares present a balanced risk/reward proposition and we therefore downgrade the stock to neutral," the bank said.
JPM noted that the shares have outperformed the sector by around 290% since 3Q 2020, where it argued that the market underappreciated the group's balance sheet strength as well as potential earnings upside from restructuring.
"With much of this now realised, and with the normalisation of commodity prices and volatility, we see more limited upside from here," it said.
The bank said its refreshed 2025/2026 earnings per share estimates are 11%/5% below Bloomberg median consensus.
"We expect interim results on July 24th to confirm that Energy Markets & Trading as well as UK Energy Retail market conditions remain challenging, although investors should see these conditions as one-off," JPM said.
At 1020 BST, the shares were down 1.6% at 160.90p.
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