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) - Jefferies has lifted its target price for Drax from 580p to 600p and reiterated a 'buy' rating after the electricity services group's strong full-year results last month.
Despite the 15% upswing in the shares since the results on 29 February, Jefferies said it still sees 22% upside to its new target price.
"In our view, Drax management delivered an impressive presentation of strong FY23 earnings recently, combined with increased visibility on non-biomass earnings beyond 2027. This appears to be welcomed by the market," the broker said in a research note on Monday.
After adjusting its estimates post-results, Jefferies said it stands around 5% above consensus with its earnings forecasts fo 2024 and 2025.
"Positive drivers of earnings include slightly higher biomass generation than previously assumed. The negatives include more normalised hydro earnings and a small reduction in biomass supply earnings forecasts," the broker said.
If the stock reached the new 600p target price, Drax would trade at a multiple of 3.3 on an enterprise value-to-EBITDA basis on 2024 estimates, and 5.1 times earnings.
Drax shares were up 0.9% at 491.2p by 0919 GMT.
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.
