RBC Capital downgrades Centrica

RBC Capital Markets downgraded British Gas owner Centrica on Monday to ‘sector perform’ from ‘outperform’ as it revisited the company’s capex opportunities and assessed where it now stands on future growth options.

"Smart meters offer entry into recurring index-linked revenues, however challenges in the UK battery market, low multiples placed on flex gen assets and poor visibility on potential nuclear investment means we are less positive on near term growth options," RBC said.

The bank also said that a lack of near-term catalysts versus some UK peers is a challenge for Centrica in its view, with Drax and SSE for example "likely to benefit from visible touchpoints over the coming months".

RBC said its earnings per share estimates for 2024-2026 sit below Bloomberg consensus and while it sees see value in Centrica over the medium term, it thinks there are better near-term options elsewhere.

The bank lifted its price target on the shares to 145p from 140p.

At 1250 GMT, the shares were down 1.5% at 130.32p.