National Grid Shares Have ‘Limited Valuation Upside’

National Grid (LON: NG.) shares were downgraded by Citi on Tuesday, with analysts citing limited upside following a strong recent rally in the stock.

Citi lowered its rating on the FTSE 100 utility from Buy to Neutral, and trimmed its 12-month price target to 1,050p from 1,063p. 

“We downgrade NG shares to Neutral following a 10+% re-rating in the last three months,” Citi said. “We now see the shares as fairly reflecting NG’s growth prospects combined with policy and regulatory support.”

While Citi maintained a positive view on regulated asset growth in the utilities sector, it argued that National Grid’s valuation is now stretched. 

They explained that the shares currently trade at a roughly 45% premium to the company’s rolling spot regulated asset base (RAB) and a 35% premium to its March 2026 RAB. 

The bank added that the pricing is “reaching some of its highs in the recent past,” Citi noted.

Citi also highlighted that foreign exchange could be a risk going forward, warning that “FX (GBP/USD) [is] a potential headwind.” 

Despite the downgrade, Citi said it continues to prefer utilities offering regulated growth such as National Grid “especially in the current macro context,” but concluded that “we see limited valuation upside” at current levels.