British Gas owner Centrica PLC (LSE:CNA) has been kept as a 'Buy' over at Berenberg, with the European bank's analysts lifting their price target to 190p from 155p.
It comes based on the analyst's view of Centrica's balance sheet flexibility, and scope for higher shareholder returns.
"Centrica now retains a strong net-cash balance sheet, which we think provides management with good flexibility to materially increase shareholder distributions while also meeting its ambition to invest £4bn from 2024-2028," said analyst James Carmichael.
"The addition of long-term, relatively low-risk, regulated earnings is also positive, in our view, and we expect more to come."
The broker said Centrica’s net cash position of around £2.5 billion, gives it the ability to support £4 billion of planned investment from 2024–2028 while still growing dividends and buybacks. It forecasts dividend per share growth of 15% in 2026, 10% in 2027 and 5% in 2028, alongside an £800 million extension to the buyback. Dividend cover is expected to remain at 2x.
Recent investments include a 15% stake in the Sizewell C nuclear project, which offers a regulated 10.8% return on equity, and a 50% interest in the Grain LNG terminal, contracted until 2029 and expected to generate a double-digit equity IRR.
Centrica is also in talks with government over extending the life of its Rough gas storage facility, which could attract up to £2.00 billion of investment under a cap-and-floor model.