Broker snap: Centrica's nuclear new build exit removes uncertainty, says Seymour Pierce



LONDON (ShareCast) - Seymour Pierce has retained its 'buy' rating and 403p target price for Centrica (LSE: CNA.L - news) after the energy giant revealed on Monday that it would not be proceeding further in nuclear build in the UK.

The joint venture with EDF Energy (80% EDF (Paris: FR0010242511 - news) : 20% Centrica) was formed to undertake pre-development activities and there was an initial agreed £1.0bn cap on expenditure; so Centrica's £200m share of this will now be written off.

The company also said that it would launch a £500m share repurchase programme to return surplus capital back to shareholders.

Seymour analyst Angelos Anastasiou said that if the buy-back is completed by the end of the year at around the current share price, his earnings forecasts for 2014 would increase slightly.

"This announcement removes some uncertainty around Centrica's investment intentions, confirming some recent press speculation," Anastasiou said.

"The share buy-back is small, but its impact should be modestly enhancing; and given the group's very strong underlying cash flow, it retains its firepower with respect to other investment options, along with the potential for further capital returns."

Shares were up 0.68% at 355.5p by 11:21 on Monday.