British Gas owner to keep churning out huge profits says top US bank

Centrica (LON:CNA) is being tipped to keep producing more headline-grabbing profits by Citigroup (NYSE:C), which has upped its target price accordingly.

The US bank says yesterday’s capital markets day ticked many boxes: sustainable earnings, credible strategy to deliver growth in the medium term and shareholder returns (dividends and share buyback).

“With clarity around its strategic priorities, investments and financial outlook, we believe even those more critical of Centrica’s business model in the past will have to take a fresh look at the equity story.”

Citi has raised its earnings per share forecasts years by 20% and target price to 155p but said even with these upgrades it sees the main risk is that it is being too conservative.

“Even after these changes, we see upside risk to second-half estimates, more cash returns 12 months down the road and a higher level of sustainable profits than the mid-range provided by Centrica.”

Buy is the bank’s recommendation.

Shares rose 0.2% to 133.6p.