Broker lifts target as services growth, smart meters and infrastructure optionality underpin medium-term value creation
RBC Capital Markets has reiterated its 'outperform' rating on Centrica PLC (LSE:CNA), raising its price target to 215p, as it argues the group is entering a period of improving earnings quality, stronger visibility and attractive capital returns.
The analysts highlight a combination of operational discipline, capital allocation strength and multiple medium-term catalysts that are not fully reflected in the current valuation.
A central theme of the note is Centrica’s ability to generate growth while maintaining capital discipline.
RBC forecasts an EPS CAGR of around 10% between 2025 and 2030, with the shares trading towards the lower end of European utility valuation ranges on forward P/E multiples.
This, the bank argues, creates an attractive entry point given the company’s improving mix of contracted and recurring earnings.
Within the Retail division, RBC sees scope for meaningful value creation by extracting more revenue per customer.
Centrica’s ~7.5 million-strong customer base provides a platform to expand higher-margin services and solutions, including repairs, maintenance and home energy upgrades.
Cross-selling into this installed base is viewed as a key driver of margin expansion, supporting the group’s ambition to move towards an end-to-end energy services model.
This opportunity is expected to be a focus at full-year results, as Centrica targets the upper end of its £1.3 billion–£1.9 billion group EBITDA run-rate by 2028.
RBC also highlights the smart meter rollout as an increasingly important source of contracted cash flows.
With £900 million of planned investment by 2028, Centrica is expected to operate more than 2.5 million meters by the end of 2026, rising to around 5 million by 2028, generating an estimated £130 million EBITDA run-rate with strong visibility.
In Infrastructure, the bank points to optional upside from assets such as Sizewell C and Isle of Grain, while noting that a positive regulatory decision at Rough gas storage could act as a near-term catalyst.
Centrica’s remaining £4 billion capital plan to 2028 also provides flexibility for further value-accretive investment and additional shareholder returns.
RBC’s sum-of-the-parts valuation underpins the higher target price, with upside scenarios linked to stronger British Gas margins, improved upstream valuations and outperformance against growth targets.
In early afternoon trading, the stock was flat at 191.1p.