Drax Shares: Analyst Bullish Ahead of July 31 Results

JPMorgan resumed coverage of Drax Group (LON: DRX) with an Overweight rating and a price target of 1,000p in a recent note, citing the company’s strong positioning amid the growing challenges of the UK power grid.

Analyst Pavan Mahbubani highlighted Drax’s ability to create long-term value as the grid becomes increasingly intermittent, driven by the shift toward renewable energy. 

“Our analysis continues to support our view that the company is well-positioned to create value as intermittency increases in the UK power grid,” Mahbubani wrote.

The bank forecasts 46% upside to Drax’s share price prior to the note’s release and has placed the stock on its “positive catalyst watch” ahead of interim results, due on July 31.

JPMorgan also expects a capital return update, predicting a £200 million extension of the company’s existing share buyback programme to be announced alongside the results. 

“We expect the company to continue to be disciplined on capital allocation,” the note added.

Drax operates renewable power assets in the UK, including biomass, hydro-electric, and pumped hydro storage assets across four sites in England and Scotland.

The company has previously stated its intention to play a significant role in supporting energy security while helping the country achieve its net-zero targets.

The company’s shares closed Friday’s session up around 0.9%, while in early Monday trading, they are down approximately 0.4% at 686.5p per share.