No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - Citi upgraded Drax on Wednesday to 'buy' from 'neutral' and lifted the price target to 850p from 689p as it pointed to limited downside risk.
"Whilst we remain inherently sceptical of biomass as an economically viable, clean and sustainable technology, the signed government CFD extension to 2031 has prolonged Drax's asset life, dampened its cashflow cliff and bought company time to explore other strategic opportunities," the bank said.
"With old generation sites redeveloped for AI/data centre usage sold and option for inertia contracts, it's hard to ignore potential value of 'old-world' assets at Drax, which historically been valued at zero."
Citi said it now conservatively includes some of these assets in its valuation.
The bank said that under a blue sky scenario, it sees a further circa 270p a share of potential value creation.
At 1220 GMT, the shares were up 4.7% at 762.50p.
The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.