Investors in British Gas owner Centrica PLC (LSE:CNA) could see 16% upside, according to analysts at RBC, which has repeated an 'outperform' rating and a 225p price target.
It comes despite a trimming of near-term earnings forecasts, too, with analysts pointing to stronger infrastructure performance, and longer-term growth assets continue to support the investment case.
The Canadian bank did, however, cut its 2026 adjusted EPS forecast by around 5% to 11.0p from 11.6p after factoring in the Severn CCGT acquisition, higher interest costs and a higher tax charge.
Retail was the softer spot in Centrica’s latest trading update, prompting RBC to lower its 2026 retail EBITDA forecast to £521 million, close to the bottom of the company’s £500 million to £800 million guidance range.
“Infrastructure saw a positive tailwind in the period, it was the headwind in retail that was the surprise for the market,” RBC said. That weakness was partly offset by a stronger infrastructure outlook, with the broker lifting its 2026 infrastructure EBITDA estimate by 8.7% to £673 million.
RBC said the acquisition of the 850MW Severn CCGT adds another gas asset to Centrica’s generation portfolio, with the plant benefiting from capacity market payments averaging around £35 million a year until 2030. The broker said peak capacity market years in 2028 and 2029 could put earnings slightly above Centrica’s £30 million to £60 million EBITDA guidance for the asset.
Longer term, RBC said infrastructure growth is underpinned by assets such as Sizewell C, MAP and Isle of Grain, but flagged retail and optimisation as the key swing factors for Centrica’s plan to reach £2.0 billion of EBITDA by 2030.