Centrica PLC (LSE:CNA), the British Gas owner, has been upgraded to buy by Citi, which raised its price target on the stock to 218 pence from 200 pence, arguing that rising geopolitical tensions and volatile gas prices make the company's strategic assets increasingly valuable.
The US bank said the ongoing conflict in the Middle East and recent gas price rises were likely to sharpen the UK government's focus on energy security, benefiting Centrica in particular, given its ownership of Rough, the UK's largest gas storage facility, and its involvement in the proposed Sizewell C nuclear power station in Suffolk.
Citi said Centrica was well positioned to support government objectives around homegrown low-carbon power generation, and that gas market volatility should also boost its energy trading and optimisation business.
The bank said it viewed Centrica's long-term earnings as driven primarily by the growth of these strategic assets rather than by power prices alone, reducing the company's exposure to commodity swings.
Citi acknowledged its own earnings forecasts for 2028 and 2030 remain below the company's own guidance, reflecting only confirmed growth, but said the market appeared willing to pay for future value creation given management's track record.
In late morning trading, the shares were off 1% at 199.5p.