Centrica PLC (LSE:CNA) may not often make headlines, but a potential deal on the Sizewell C nuclear project could give the energy group a meaningful lift.
Shares have already recovered well over the past year, and now Jefferies is suggesting there’s another reason to stay positive on the stock.
The American bank reckons its possible involvement in the Sizewell C project in Suffolk could add about 5% to its market value.
That’s based on a simplified scenario assuming a 10% internal rate of return (IRR) and a 20% equity stake, spread across £150 million of annual investment over 15 years.
The numbers are broad brush, but they help frame what could be at stake. On that model, the uplift would be worth around 10p a share. More optimistic assumptions take it to 14p, or roughly a 9% boost to the market cap.
The UK government has already committed £14.2 billion to Sizewell C, with press reports putting total project costs between £30 billion and £40 billion.
Centrica hasn’t commented publicly, but reports suggest a deal involving investors could be announced as early as July, possibly timed with a UK-France summit.
This kind of long-term infrastructure investment could be a neat fit for Centrica’s broader £4 billion capital allocation plan between 2025 and 2028. But a lot depends on the final terms.
Nuclear projects are notorious for delays and cost overruns, and how much of that risk Centrica might have to shoulder is unknown. Yield during construction is another variable, although a 6% figure has been floated by Sizewell C’s managing director.
Elsewhere, the investment case isn’t all nuclear. Jefferies has trimmed its earnings forecasts slightly for 2025, reflecting mild weather pressures on British Gas, lower storage earnings, and softer commodity prices.
Even so, the broker keeps its 180p price target intact, with a 'buy' rating. At that level, the shares would trade on a price-to-earnings ratio of 12 times 2026 earnings, with a 4% dividend yield and EV/EBITDA of 5.4 times.
In a sector still adjusting to volatile energy markets and shifting policy, Sizewell C could give Centrica both visibility and optionality. There’s no deal yet, and the numbers remain theoretical, but the direction of travel is worth noting.