The current cold weather in the UK should be a boost for shares in power companies, but that does not seem to be the case at Drax.
The coal-fired power station owner - which is in the throes of moving to biomass - is down 15.5p at 611.5p after Liberum Capital moved from buy to hold. Analyst Peter Atherton said the company's management had executed the move to biomass effectively so far but he added:
In our opinion the share price is already implying biomass fuel price outperformance, additional unit conversion and a continued favourable dark spread environment. At the same time, Drax is perhaps only 20% along the delivery pathway. We move from a buy to a hold recommendation. This reflects the strong recent share price performance (15% year to date) and our belief that further biomass progress has to be shown before an incremental re-rating could be justified.
