Lower energy prices somewhat undermine some potential good news for Drax (LON:DRX) which, according to Barclays Capital, is now more likely to see some biomass subsidies.
Barcap analyst Stephen Hunt, in a note, highlighted that German power generation rival RWE had secured EU state-aid approval for a CFD subsidy for the conversion of a coal plant at Lynemouth, Northumberland, to biomass.
Hunt says this bodes well for Drax’s plans to convert its third coal plant.
“RWE's approval increases the likelihood Drax's subsidy is approved at/near £105/MWh, in our view (with a Drax CFD at some level very high probability),” he said.
Nevertheless, Barcap has reduced its price target to 320p from 380p (current price: 254p), though the broker’s ‘oveRWEight’ recommendation is retained.
Elsewhere, Dixon Carphone (LON:DC.) has been downgraded by Investec to ‘add’ from ‘buy’ .
Peel Hunt indicates it is time to stop selling temporary power group Aggreko (LON:AGK) as its recommendation is upgraded to ‘hold’.
And the same broker also upgrades equipment hire group VP Plc (LON:VP.) to ‘buy’ from ‘hold’ with an 850p price target that implies some 11% upside to the current price of 765p.