Centrica Share Price Target Cut, Drax Target Raised by Barclays

Barclays adjusted its outlook on two UK energy names in a note this week, cutting Centrica’s (LON: CNA) price target while raising its target for Drax Group (LON: DRX).

Centrica's price target was lowered to 175p from 190p, although Barclays analyst Dominic Nash maintained an “Overweight” rating on the stock. 

Despite the target reduction, the firm sees potential upside in the sector overall due to balance sheet clarity and capacity payments. 

Centrica’s share price has struggled over the past year, declining more than 14% over the last 12 months. However, the stock has shown signs of recovery recently, rising over 10% in the past three months. On Thursday, Centrica fell 2.6% but edged up by 0.1% in early Friday trading.

Meanwhile, Nash increased Drax’s price target to 1,220p from 1,190p, also retaining an “Overweight” rating on the shares. The bank also noted optimism around the performance in the broader utility sector. 

Drax’s shares have surged over 20% in the last year, with a slight dip of 1.7% on Thursday followed by a 0.6% gain on Friday.

Barclays’ overall outlook on European utilities remains positive, citing the sector as remaining “in the foothills of a super-cycle,” with regulated utilities now the preferred sub-sector. 

Both companies are expected to benefit from low European expectations and potential capacity payments.