On Friday, Goldman Sachs (NYSE:GS) adjusted its price target on shares of Centrica Plc (LON:CNA:LN) (OTC: CPYYY), reducing it slightly to GBP1.92 from GBP1.94, while reiterating a Conviction Buy rating on the stock. The firm's analyst cited changes in their estimates as the reason for the price target adjustment.
The new price target is primarily based on a P/E valuation, which now stands at 172p per share, a modest decrease from the previous valuation of 175p per share. This valuation is calculated using a forward P/E multiple of 10.9 times for the fiscal year 2027, which aligns with the average of Centrica (OTC:CPYYY)'s peers. Additionally, the price target takes into account a projected cash build-up, which has been discounted back three years.
The remaining portion of the price target, constituting 35%, is derived from a sum-of-the-parts (SOTP) valuation. The SOTP valuation for Centrica has been slightly revised to 229p per share, down from the earlier estimate of 231p per share.
Centrica, a leading energy and services company, has garnered continued interest from Goldman Sachs, with the firm maintaining a positive outlook on the company's shares. The Conviction Buy rating indicates the firm's strong belief in Centrica's investment potential.
Investors and market watchers will likely monitor Centrica's performance in the coming months to see if the company's financial results and business developments align with Goldman Sachs' expectations as reflected in the Conviction Buy rating and revised price target.
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