Plethora of positives priced at a pittance

Research evidence excerpt

Equity Research

European Utilities & Clean Energy

10 August 2026

Drax

Plethora of positives priced at a

pittance

Drax faces a number of transformational pivots. We now

model solar and BESS additions. Power station contains

significant optionality value: datacentres, conversion of units,

biomass competitive with power demand growth. Flexgen

and DCs core thematics. We increase PT to 1120p and remain

OW.

OVERWEIGHT

DRX.L/DRX LN

Unchanged

European Utilities & Clean

Energy

POSITIVE

Unchanged

GBp 1120

Price Target

raised 2% from GBp 1100

GBp 719

+55.9%

Price (06-Aug-26)

Potential Upside/Downside

Source: Bloomberg, Barclays Research

We update our valuation and raise our PT to 1120p. We reiterate our OW rating: We update

our numbers to take into account results, acquisitions of battery projects and BSIF. Drax sits at

an intersection of a number of powerful energy themes and has consistently contained valuable

capital allocation optionality. While this has provided positive diversification in opportunities,

we believe the breadth of opportunities has also contributed to investor concerns around

strategic prioritisation and execution as well as disappointment over the suspension of the

buyback. We expect this discount to narrow through 2026.

We see significant clarity through 2026 and 2027 as Drax continues to pivot away from BECCS,

dials down pumped hydro storage and pellet expansion and the buyback and dials

up datacentre exposure, flexgen opportunities and DPS life beyond March 2031.

Drax transforming into three segments, each of which exposed to a number positive

trends:

2419

336.69

99.37

0.7

4.22

1.02

517

Market Cap (GBP mn)

Shares Outstanding (mn)

Free Float (%)

52 Wk Avg Daily Volume (mn)

Dividend Yield (%)

Return on Equity TTM (%)

Current BVPS (GBp)

Source: Bloomberg

Price Performance

52 Week range

Exchange-LSE

GBP 9.38-6.17

• Drax power station (DPS): Biomass power generation and pellet production and the

development of DPS as a datacentre and energy centre.

• Flexgen: Hydro, OCGTs, retail and considerable investment, c.3.5GW, in batteries (BESS).

Balancing costs have recently risen to close to highs again (£4bn/year) and NESO expects

…