The US investment bank cut its rating for the energy distributor to ‘underweight’ from ‘equal-weight’ and reduced its target price for the stock to 115p from 160p.
In early afternoon trading, Centrica shares were 4.6% lower at 141.65p.
Morgan Stanley’s analysts noted that Centrica continues to lose customers across its UK and US businesses, and it has missed targets for new business growth.
They expect UK retail competition to remain intense for Centrica post a tariff cap, which will mean lower customer numbers, and more pressure on profitability.
The analysts also see greater levels of competition coming in the US retail business as peers consolidate and remove costs.