Centrica Shares: Should Investors Buy the Dip

Centrica (LON: CNA) has seen its shares decline more than 8% in 2024. While some analysts and investors may be wary at current levels, one believes the risk-reward for the stock is now an attractive one.

Jefferies analysts upgraded Centrica to Buy from Hold in a note to clients this week, keeping an unchanged price target of 150p on the stock.

“Management is building a track record of consistent delivery in downstream retail and optimisation segments,” said the investment firm, noting that these factors underpin most of the stock's valuation.

The firm, highlighting the stock's decline and risk-reward, added that Centrica shares are “back in value territory.”

In its analysis of Centrica shares, Jefferies included some valuation upside from future investments, which they say reflects “increased visibility that has come through over the last six months.”

Jefferies is note the only firm to become bullish on Centrica over the last few months. Berenberg upgraded it to Buy from Hold back in July, raising the price target to 155p from 130p a share.

At the time, they told investors that the company's strong balance sheet, with nearly £3 billion of net cash, continued to afford it optionality, which they believe led to a more constructive view of the investment case.

Overall, analysts are mostly bullish on Centrica shares. 13 of 15 analysts covering the stock have assigned it a Buy rating, according to TradingView. Two have given it a Hold rating. The average price target among 13 analysts is 174.7p representing a potential 35% upside from current levels.