JP Morgan has resumed full coverage of Drax Group (LSE:DRX), the biomass and renewable power generator, with an 'overweight' rating and a 960p price target for December 2027.
Analyst Pavan Mahbubani said the target implied roughly 33% upside from recent levels, following a period in which the bank had been restricted from publishing on the stock.
The note argued that Drax is reshaping its earnings base by using its balance sheet to buy and build new assets.
JP Morgan estimated that around 80% of group earnings before interest, tax, depreciation and amortisation between 2022 and 2025 came from the Drax power station and pellet production.
That share is expected to fall to about 40% over 2026 to 2031 as hydro, gas plants, battery storage and recently acquired solar and wind assets contribute more.
Mahbubani sees the company as well placed as Britain's power mix grows more volatile, with baseload nuclear and biomass making up a shrinking share of generation.
The bank's 2029 earnings estimate sits at the lower end of Drax's £650 million to £800 million guidance, which it described as a conservative starting point with room for upside.
JP Morgan expects a trading update in September, when Drax is likely to fold in the contribution from its Bluefield Solar Income Fund acquisition.
An investor day is also anticipated in the coming months, with fresh detail on capital allocation and medium-term targets.
