Drax turns the power back on as broker stokes the fire
INVESTORS can be an impatient bunch. When Drax told the market in February it would be reviewing its dividend policy, it triggered a stampede for the exit.
Shares in the company behind the Drax power station in Yorkshire have sunk 20% since the revelation, which came in its annual results.
But analysts at Barclays today did a good job of convincing investors that its reasoning was sound and that its capital markets day in June could help the shares power back up.
“We understand Drax’s consultation is a genuine attempt to balance priorities of growth [capital expenditure] and increased returns to shareholders. We thus see no justification for the scale of Drax’s recent share price reversion,” said Barclays’ Stephen Hunt.
The analyst said Drax, which is shifting its focus from coal to biomass, might even unveil a new progressive dividend policy at the investor day.
The shares charged to the top of the mid-cap leaderboard, surging 22.9p, or 7.5%, to 326.8p as Hunt upgraded the stock to Overweight. The FTSE 100 finished the week down 16.28 points at 7220.89, with Barclays weighing on London’s main share index.
Among the mid-caps, Balfour Beatty was in favour after Numis urged clients to pile in to the infrastructure firm.
The shares rose 11.17p, or 4%, to 295.27p as it hailed the company’s more selective approach to asset sales and raised its rating to Buy.
Sirius Minerals increased by 0.25p to 26.25p on its main market debut. The company, which is developing a huge potash mine under the North York Moors national park, moved up from AIM.
On the junior market, online fashion retailer Boohoo, up 0.5p at 187.5p, revealed its chief financial officer cashed in on this week’s annual results, which saw profits double.
Neil Catto exercised options over 1.6 million shares at 50p and selling them for 187p each, making a profit of more than £2 million.
Finally, strong results from recent AIM float Ultimate Products helped the consumer products group put on 9.4p to 178.9p.
The company has proved a hit in the City since last month’s listing at 128p per share.
@jamienimmo63