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(Sharecast News) - Liberum initiated coverage of British Gas owner Centrica on Wednesday with a 'sell' rating and 150p price target.
"There is little doubt that Centrica has successfully turned a corner since its pandemic lows," it said. "However, the recent rally in the share price (circa 75% YTD), fuelled by increased buybacks and dividend growth, has been overdone in our view.
"On balance, we believe Centrica's current valuation reflects an overly optimistic view of the company's long-term cash return and investment plans, as market normalisation leads to a declining EPS profile (a -32% CAGR 2023-27E)."
As a result, analyst Sam Wahab said the current share price represents a compelling opportunity for investors to take profits.
At 1000 BST, Centrica shares were down 4% at 159.10p.
