JPMorgan reiterates Drax Group stock rating on strong EBITDA outlook

JPMorgan has reinstated an Overweight rating and set a GBP9.60 price target for Drax Group Plc, based on the company's strong earnings per share outlook. JPMorgan's analysts increased their EPS estimate by 3% following the company's trading update, which highlighted the robust performance of their power generation operations within a volatile market.

Drax's revised guidance places their EBITDA at the higher end of industry consensus, positioning the stock near its 52-week low of $17.16, despite InvestingPro calculations suggesting the shares are undervalued. Notably, Drax has a history of consistently raising dividends for ten consecutive years, a factor that enhances its shareholder yield, as noted in the company’s InvestingPro Tips.

Drax is also actively developing innovative options for its power station, including a data center project. The firm plans to host a Capital Markets Day on November 23, 2026, to provide further insights into its decade-long growth strategy. This positive update on Drax Group comes after a hiatus in JPMorgan's coverage, with the firm now resuming its investment interest in the company, indicating a favorable outlook.

The resumption of coverage, coupled with the aggressive price target, reflects JPMorgan’s renewed confidence in Drax’s future performance, offering investors valuable information about the company's potential trajectory.