Drax Preview - Transformation Story Remains Underappreciated

Research evidence excerpt

Drax Preview - Transformation Story Remains Underappreciated

sensus

We raise our FY26/FY27 EBITDA forecast by 2%/15%. Our broader model update now

includes the benefit of the proposed BSIF acquisition, expected to close in Q3. JEFe FY27 Exhibit 1 - EPS Consensus Stable But Share

and FY28 EBITDA is £664m and £656m, respectively, where we are on average (2026-28) 6% Price Losing Momentum

above VA consensus. We model BSIF EBITDA at £130m pa but there could be upside to it 150140

considering potential synergies, as we discussed in our previous note. For 1H26, we forecast 130

EBITDA of £289m, representing ~40% of JEF's FY26 forecast. We expect FY26 earnings to be 100= 120110

100weighted towards H2, supported by the resolution of the FlexGen forced outage, seasonally 2025

Janstronger demand following an unusually warm H1, and we assume renewables will contribute 9080

approximately £33m of EBITDA in 2H26 (~25% of £130m annual EBITDA). 7060

We reduce our PT to 920p (from 1,120p) while reiterating our Buy rating, implying ~20% Jan-25 Feb-25 Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Sep-25 Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26 Jun-26 Jul-26

upside. Our EV estimate has increased by ~10% to £~5.0bn - this is driven by three effects: we . Drax stock price Consensus 2026 EPS

Source: Jefferies, Factset

include the proposed BSIF acquisition impact, but at the same time reduced our Pellet valuation

(where we have reduced EBITDA forecasts). We reduced EV for Data Center opportunity where

we increased the risk factor - as of now we have seen limited development on Drax's DC

opportunities. With the proposed BSIF acquisition, Drax paused its buyback program, and our

assumption is that the company will maintain this position and will focus on balance sheet