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British Gas owner could return £4.5 billion by 2026
British Gas owner, Centrica PLC (LON:CNA), could return up to £4.5 billion to investors by 2026, according to research from Barclays (LON:BARC).
The broker made the prediction after running the numbers on Centrica’s cash flow and debt in the years ahead.
“With infrastructure cashflow of around £1 billion covering the £1 billion dividends through to 2026, we estimate annual net cash rising by c.£500 million per annum after dividends, reaching a net cash position of £3.5 billion by December 2026.”
“Return of this cash together with the £1 billion dividend payout would result in £4.5 billion returned to shareholders, or a return of 60% of the current market capitalisation by December 2026,” Barclays added.
The broker has raised its price target to 200p from 160p It sees sustainable earnings in core division of around £800 million from 2026 equivalent to EPS of 11-12p.
Barclays rating of overweight remains unchanged.
Margin miss expected but priced in at Smith & Nephew - UBS
Smith & Nephew PLC held firm against a falling market as UBS took the stock off its sell list, upgrading to neutral, despite predicting margin at the medical technology company will fall short of guidance.
The Swiss bank explained this outcome is now one that is being increasingly expected by analysts.
"We expect S&N to miss its 2023 and 2025 margin guides as they both imply record levels of margin expansion despite a recent track record of poor delivery and growing challenges in its Ortho business (40% of group revenues). However, sellside consensus expectations have come down and are now below the 2023 guide whilst our reverse discounted cash flow analysis and conversations with investors suggest that most expect the 2025 guide to be pushed out," UBS commented.
Thus, UBS believes Smith & Nephew's likely margin disappointment is already priced in.
Upgrading the stock to neutral from sell, UBS set a new share price target of 1,150p, up from 1,040p.
Has Wilko found a night in shining armour?
Has embattled retail chain, Wilko, found a saviour?
Sky News is reporting interest from Gordon Brothers, which has backed British high street names including Laura Ashley.
Sky says talks with Wilko's advisers are ongoing about a potential deal.
Exclusive: Gordon Brothers, the specialist retail investor which owns Laura Ashley, is considering a bid to rescue Wilko, the ailing family-owned general merchandise chain which is teetering on the brink of administration with up to 12,000 jobs at risk. https://t.co/snM9X5oAIm— Mark Kleinman (@MarkKleinmanSky) August 8, 2023
Sources said that an offer could involve Gordon Brothers providing funding to the general merchandise retailer to implement a restructuring that would involve significant numbers of store closures and job losses.
Last week, Wilko confirmed that it was filing a notice of intention to appoint administrators, putting as many as 12,000 jobs at risk.
But the report quoted "insiders" as saying the the chances of Gordon Brothers reaching a deal to rescue Wilko were "relatively low".
Barclays boost for Beazley, sees close to 40% upside
Top of the FTSE 100 risers is Beazley PLC (LON:BEZG) supported by an upbeat note from Barclays which sees around 40% upside from the current share price.
The broker has a 700p share price target and an overweight rating, compared to today's 520p price.
"We expect Beazley to show its best year so far in 2023, and continue to grow at attractive margins since the strengths of the business - ie cyber - are underpinned by secular demand."
"The 5.2x P/E 2024 seems too cheap to us, with implied 5.0x P/E multiple for its industry-leading Cyber business," Barclays added.
"We believe Beazley's current P/E multiple does not adequately reflect the unique nature of its cyber proposition - which we view as a secular growth opportunity in a cyclical industry," the broker added.