Broker snap: 'No major positives in sight' for Centrica, says Credit Suisse

15th Nov 2013 09:19

Credit Suisse has cut its target price and reiterated its 'underperform' rating for British Gas owner Centrica, saying there are 'no major positives in sight' after the group's reduction in full-year forecasts.The company on Thursday said that it now expects 2013 adjusted earnings per share (EPS) to be at similar levels to 2012 due to challenging market conditions, with profitability at British Gas Business estimated to be "significantly lower". This equates to a reduction of around 5% to 2013 EPS, according to Credit Suisse.The bank said: "For us, the biggest concern is that 2014 organic growth has dropped to around zero. We reduce our 2014 EPS c5%. We cut our target price to 300p (from 310p) and remain negative on valuation and growth."With Centrica trading at 12.7 times 2014 earnings, analysts said that this is "expensive" compared with the oil and gas sector which trades at a multiple of just 10.3. The two UK regulated energy utilities SSE and National Grid meanwhile, trade at 12.4 times and 13.5 times earnings, respectively.The bank said that it will be difficult for British Gas Residential operations to grow earnings - "given political opinion" - to compensate for the tough conditions at British Gas Business. Meanwhile, it said that the upstream operations continue to be "squeezed by converging revenues and costs".The stock was down 1.85% at 338.9p on Friday morning, extending losses from the day before when it fell around 4%.BC