FTSE 100 round-up: Centrica, Glencore, Rio Tinto, Taylor Wimpey

Centrica shares were among today’s heaviest blue-chip fallers after its pre-AGM update did little to enhance its position as the most-crowded trade in European utilities.

The stock dropped as much as 5% after the British Gas owner said this year’s performance has been in line with expectations against a more normalised external environment.

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Adjusted earnings per share for 2024 are set to be within the City’s forecast range of 15.8p and 21p, which compares with the 33.4p and 34.9p delivered over the two previous years.

Today’s performance is likely to reflect jitters over how energy marketing and other trading operations will fare at a time of lower commodity prices and reduced levels of volatility. This will be particularly noticeable over the second half of the financial year.

Centrica (LSE:CNA) shares touched 170p in September but are down 19% since then, a de-rating also linked to fears of value destruction on a large cash pile of more than £2.5 billion.

Supporters argue the recent weakness overlooks the fact that Centrica is fundamentally changed, with a reduced cost base and a structurally profitable set of businesses.

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This was backed up by today’s update as Centrica said retail supply and optimisation businesses will be within their medium-term operating profit ranges two years ahead of schedule.

Analysis by UBS earlier this week showed that investors have continued to crowd Centrica shares as the most-popular long position in European utilities.

Today’s update was posted ahead of the company’s AGM in Glasgow, where more than 90% of shareholder votes were cast in favour of the energy firm’s remuneration report. Boss Chris O’Shea got a total of £8.2 million in 2023, including £5.9 million from long-term incentives.

Elsewhere in the FTSE 100, a number of target price changes swayed the mood in the mining, housebuilding and healthcare sectors.

They included modest upgrades for Glencore (LSE:GLEN) and Rio Tinto Registered Shares (LSE:RIO) after Deutsche Bank refreshed its copper price forecasts and earnings estimates for its European and North American coverage.

Copper recently touched the bank’s previous year-end target of $10,000 a tonne, having benefited from improving global growth and a surge in speculative flows against a backdrop of structurally tight supply.

Deutsche Bank expects the upward trend to continue into 2025, but following a powerful rally in recent months it warns of a period of consolidation in the seasonally slower summer period.

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It also pointed out that BHP Group Ltd (LSE:BHP)'s attempted takeover of Anglo American (LSE:AAL) had highlighted the strategic importance of copper and the challenges in adding new supply at a time when “future facing” demand drivers such as electrification are building momentum.

The bank has lifted its long-term price forecast from $9,400 to $10,000, with its buy recommendations on Glencore and Rio Tinto now at 550p and 6,200p respectively.

In the housebuilding sector, Taylor Wimpey (LSE:TW.) shares touched 152.5p earlier today after Berenberg analysts upgraded to a “buy” recommendation with a new target price of 175p.

And Smith & Nephew (LSE:SN.) rallied 26.7p to 1,021.9p after UBS said shares in the medical devices maker looked cheap at a close to five-year low.

The support comes as chief executive Deepak Nath targets a margin above 20% by 2025 as part of his 12-point plan to make Smith & Nephew a “consistently higher-growth company”.

UBS believes the timeline is too optimistic but reckons there could be an 18% upside to 2028 earnings forecasts should management eventually deliver on its promises. It has raised its price target from 1,090p to 1,200p, representing a multiple of 15 times 2025 earnings.