JPMorgan resumes coverage on Drax with 'overweight' rating
By Michele Maatouk
Date: Friday 21 Aug 2026
(Sharecast News) - JPMorgan resumed coverage on Drax on Friday with an 'overweight' rating following a period of restriction, with a 960p price target that implies 33% upside potential.
The bank said Drax has been utilising its balance sheet capacity to invest in new assets and businesses. JPM estimates that around 80% of group EBITDA between 2022 and 2025 came from a combination of Drax Power Station and Pellet Production, which reduces to around 40% over the period 2026-2031 as contributions increase from assets including hydro, gas plants, battery storage, and recently acquired solar and wind assets.
"We see Drax as well-positioned to create value as the UK power generation mix becomes more volatile, with the share of baseload nuclear and biomass in the UK mix gradually declining," it said.
"Our 2029 EBITDA estimate is consistent with the lower end of the company's £650-£800m guidance (excluding Devex and the BSIF acquisition) and we see this as a conservative starting point with upside risk should Drax Power Station and other flexible generation assets do better than we model."
JPM said it expects Drax to publish a trading update in September, updating guidance to include the contribution of BSIF for 2026.
"We would also expect an investor day in the coming months with an update on capital allocation priorities and refreshed medium term targets," it added.
At 1340 BST, the shares were up 1.6% at 734.50p.
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