On Wednesday, Barclays analyst Dominic Nash revised the rating for Centrica Plc (LON:CNA:LN) (OTC: CPYYY), shifting from Overweight to Equalweight and adjusting the price target to £1.70, down from the previous £1.75. The reassessment followed the company’s financial results for the fiscal year 2024, prompting Barclays to update its model and carry forward its estimates.
The firm’s earnings per share (EPS) forecasts for 2025 and 2026 have been slightly lowered, from 15.6p and 18.4p to 14.6p and 17.1p, respectively. This adjustment was made in light of Centrica (OTC:CPYYY)’s latest financial outcomes and future projections.
Barclays also accounted for Centrica’s increased share buyback initiative, now totaling £2.0 billion. This additional £500 million share repurchase has led to a reduction in Barclays’ net cash estimates for the energy company. The analyst now projects approximately £1.8 billion in net cash, or 34p per share, by the end of the fiscal year 2025, a decrease from the prior estimate of £2.4 billion. Similarly, for the end of fiscal year 2026, the net cash expectation has been revised to around £1.0 billion, or 22p per share, from the previously anticipated £2.4 billion.
The revised net cash projections contribute to a valuation of Centrica at a 7.8x cash-adjusted price-to-earnings (PE) ratio for the year 2026. Given these updates, Barclays sees a limited potential for stock appreciation, with only a 17% potential upside to the new price target. This assessment underpins the decision to downgrade Centrica’s stock rating to Equalweight from Overweight.
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