Whatever price biomass energy rises to, Drax production price will still be higher. Any subsidy from govt is up to a certain fixed level so the more power prices rise, the lower the subsidy, and the net revenue to Drax is static.I also saw news that Drax is bringing the coal plant back to life again for emergency supplies this winter? Think it might be just hot air as surely if its happening or an agreement reached we would be getting an RNS. Not least because Drax will no longer be ESG compatible. |
It’s certInly massively undervalued |
Not sure but imagine price increase is related to the fire affecting cable importing supplies from France. Assume Drax will be called on to help meet the supply shortage and be reimbursed at very hefty rates for generated electricity. News infers supplies could be affected until March 22. |
Someone's been at the crack pipe at Barclays!
Drax topped the FTSE 250 index, surging 7.7% to 472.40 pence as Barclays predicted a promising future for the power station operator.
Barclays hiked its price target for Drax by 75% to 960p from 550p. It retained its Overweight rating. The investment bank drew particular attention to Drax's bioenergy carbon capture and storage, or BECCS, negative emissions offering.
"BECCS to us has the feel of offshore wind in 2005 – marginal current economics and a large niche area but with significant potential. We see Drax becoming a global leader in developing and operating these complex BECCS projects both in the UK and globally, and we estimate a long-term upside scenario valuation of 3,800p," Barclays said.
The investment bank noted 3,800p is about eight-times higher than Drax's current share price. |
Minimal independent commentary so far on first half results beyond the CEO depiction of "great". Shares marked down within the recent range. Increase in interim divi to 7.5p.
www.sharecast.com/news/news-and-announcements/drax-group-raises-interim-dividend-following-great-first-half-of-the-year--8050356.html |
JPMORGAN RAISES DRAX GROUP PRICE TARGET TO 500 (360) PENCE - 'OVERWEIGHT' |
www.sharecast.com/news/broker-recommendations/citi-upgrades-drax-centrica--7932874.html
Citi upgraded its stance on shares of Drax on Monday to 'buy' from 'neutral' following the recent UK power price rally of more than 20% in the last month.
"In our view, Drax should benefit from the circa 50% and circa 80% merchant output exposure in FY22 and FY23 respectively," the bank said.
Given the operational gearing of Drax Power, it lifted its EBITDA forecasts to FY25 by 6-20% and its earnings per share by 16-29%. As a result, the bank also upped its price target on the stock, by 28% to 505p.
"Longer term, we remain cautious on biomass as a technology in the path to net zero, given the debate on its creditability of being a truly net zero technology," it said. |
Drax shares have been a strong performer over the last year. Along with SSE they are included in the Standard and Poors "Clean Energy Index".
However the merits of Drax technologies biomass and carbon capture are controversial. |
www.pinnaclepellet.com |
electricity price has doubled in last few months?? |
Castleford Tiger - but do we know why? 10% in the past week |
New high in modern times |
Shareholders are right to be wary about Pinnacle. Wood biomass energy is viable only with heavy government subsidies – what happens when they come to an end? And Pinnacle uses wood from an environmentally sensitive area. Drax shouldn't touch it with a bargepole. Or perhaps it is just time to sell out of Drax. |
Richard,
Biomass requires cutting down of trees. Precisely what you do not want to be doing if CO2 rising/causing climate change.
Not fan of Drax biomass as it clearly isnt green,but it is slightly better than coal.
Am long but also looking for a decent profitable exit. |
Thanks Paulo4335, I am clearly not reading the right news. I dont want to get into what is / is not green, but the approach must be better than burning coal and gas. Wind and PV is all good but there needs to be other options for the days those are not producing enough and do we really want the risk of more nuclear - which is not environmentally friendly long term or good value. |
Richard, I suspect it will be to do with the govt announcements today re carbon neutral support etc - is all over the news. Volsung, I sold out of here after making a good profit because I don’t agree with the approach - was time to move on, not truly as environmentally friendly as would have you believe - hence why...” I’m out! “ |
This is why any ‘green investor’ wouldn’t touch Drax |
Good to see, but why today?
Lots of buying right at the end of the day as well, only news I can see is re the AGM about the already known Pinnacle acquisition. |
Another 5% today |
CASSINI
Post 3499
"It's because I sold last week"
Fell your pain! That sometimes happen to me as well...not this time. Holding for 550 myself, if it ever comes. |
Possibly the news on vertical integration. Acquisition of wood chip supplier ie ...
“Energy company and power station operator Drax Group's acquisition of a Canada-based supplier of wood pellets has moved forward.
A deal was agreed with Pinnacle Renewable Energy in February 2021 for the acquisition by Drax Canadian Holdings, an indirect, wholly-owned subsidiary of Drax, of the entire issued share capital of Pinnacle.
The purchase price of C$11.30 per share values the fully diluted equity of Pinnacle at C$385m (£226m), with an implied enterprise value of C$741m, including C$356m of net debt.
Pinnacle is a key supplier of wood pellets for Drax and other third parties in Asia and Europe, with C$6.7bn of contracted sales.
The deal is set to add 2.9 million tonnes of biomass production capacity to the group and significantly reduce its average cost of production.
A circular in relation to the acquisition has now been published.” |
It's because I sold last week ;0) |
Any idea what is behind that rise Castleford? |
BOOM
Up 10%
Tiger |
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