Buy Centrica on share price weakness, Kepler Cheuvreux says

Kepler Cheuvreux has upgraded Centrica to 'buy' after shares of the energy provider fell past the broker's valuation of the business.

In a note to investors, Ingo Becker, Kepler Cheuvreux's head of utilities, said Centrica's low share price had created an opportunity for investors to "jump in".

Kepler Cheuvreux cut Centrica to 'reduce' in early 2016 when the shares were at 211p. Since then the shares have fallen 22% to well below Becker's price target of 190p. At 11:52 GMT the shares were trading at 166p.

Centrica's shares have dropped due partly to regulatory pressures and the government's decision to impose a cap on prices paid by households on variable tariffs. Centrica owns British Gas, the UK's biggest energy provider for consumers.

Nevertheless, Becker stuck by his original valuation and advised clients to take advantage of the buying opportunity.

Becker wrote: "Political and regulatory scrutiny of the industry […] might be pulling some of the pressure forward, but the overall intensity of pressures already modelled by us back then are now well covered by the share price. We currently see a market opportunity and recommend that investors jump in here."