Share price: 419.80p
Target price: 460p (from 428p)
Drax is a UK electricity generator.
Drax has reached a tax settlement with HMRC, relating to the unwinding of a Eurobond debt structure, releasing cash of £180 million. The broker points out that this is potential firepower for Drax to develop its biomass proposals "should impending policy changes make these viable".
Matrix has upgraded its EPS forecasts for 2012 to 37.5p from 37.2p and has raised its target price to 460p, based on a DCF valuation.
Matrix considers that both the electricity market reform and the consultation on the banding review for the Renewables Obligation, scheduled to be announced in late spring or summer this year, could transform the company, given the "right outcomes".