Proactive Investors - JP Morgan has placed Centrica (LON:CNA) and Drax on positive Catalyst Watch ahead of interim results, both on July 27th, helping push shares higher.
“We expect both companies to report strong earnings & cash flow, and provide updates on capital allocation priorities,” the broker said.
The investment bank estimates Centrica - which owns British Gas - will have >40% of its current market cap in net cash by the end of 2024 even after having bought back £550mln worth of shares by the end of 2023 and paying £380mln in dividends between today and the end of 2024.
On Drax (LON:DRX), it thinks the shares continue to trade at a “significant discount to fair value,” despite “what we see as a clear message from the government that Drax power station will be supported beyond March 2027 subsidy expiry.”
It pointed out the government is due to publish its biomass strategy before Parliament’s summer recess which it expects will set out, among other things, how Bioenergy with Carbon Capture and Storage could be deployed in the UK, which should mean investors “turn more positive on the outlook for Drax.”
JPM raised its price target for Centrica to 150p from 140p.
Shares in Centrica rose 2.2% and Drax climbed 1.3%.