Times have changed for the once debt-laden Centrica with Citi upgrading its price target due to the British Gas owner having one of the "best balance sheets in the sector".
“Delivering above sector average 8% yield via returns to shareholders (both dividends and buybacks), Centrica shares continue to look attractive in a sector relative context,” added the US bank.
“We update our earnings and valuation to reflect the secured growth in flexible generation assets, which we estimate to deliver an aggregated portfolio IRRs of c.10% with the support of capacity market payments.
“With retail churn continuing to be low and Ofgem consulting to increase bad debt allowance, we continue to see a good balance of risk and reward from the retail division. “
Add in boosts from new investments, lower-risk retail earnings and falling liabilities and Citi has upgraded its 12-month target to 180p/share (155p previously) while keeping its 'buy' rating.
Shares rose 0.3% to 156.5p.