Power generator Drax has received a meaty upgrade from Canadian broker RBC on the back of the recent surge in power prices.
Based on a conservative adoption of forward curves, the broker has increased its underlying profit [EBITDA] forecasts 20-60% over 2023-25E, with its price target raised to a ‘street-high’ 1,150p/sh, which equates to 1,500p/sh on a full mark-to-market basis, it said.
Longer-term, Drax's growth ambitions and £3bn capex plan are aligned with the new British energy security strategy from the government aiding both security and a net-zero electricity system by 2035.
‘Outperform’ is the broker’s view. Shares rose 0.7% to 814p.