Drax Share News (DRX)

(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.