Jefferies has cut its rating on Centrica PLC (LSE:CNA), the British Gas owner, from 'buy' to 'hold', arguing that the stock's strong run this year has left it looking fully valued against a backdrop of limited near-term growth and deteriorating earnings momentum.
The investment bank said Centrica's shares, which have risen more than 10% in 2026, now trade at around 10 times its estimated 2030 earnings, a level it considers to reflect a more balanced risk-reward rather than a compelling buying opportunity.
Jefferies raised its price target by 5% to 210p, implying just 7% upside from the current price of 196p.
It cut its earnings per share estimate for 2026 by 17%, primarily driven by £100 million of higher net interest costs than previously forecast, now tethered to company guidance. Its earnings before interest, tax, depreciation and amortisation (EBITDA) estimate for the same year was trimmed by 1%.
Central to Jefferies' more cautious stance is uncertainty over Centrica's growth trajectory beyond 2028. The company has set out a 2030 EBITDA target of around £2 billion and earnings per share of approximately 22p, supported by a £4 billion investment plan running from 2024 to 2028.
However, Jefferies estimates that more than £1 billion of capital across 2026 to 2030 currently remains unallocated, and it attributed slightly less value to that spending than management's own projections imply.
The broker also noted that management played down the prospect of further share buybacks in the near term, removing a potential support for the stock.
Jefferies said it saw better opportunities elsewhere in the European utilities sector, particularly among companies with greater exposure to power grids and rising electricity demand.
The broker's 2030 earnings per share forecast of 20p sits below Centrica's own implied guidance of around 22p.
The shares were down 1% at 197.2p.