GS Utilities Daily: Drax: Capital Markets Day to pitch a new business model // Italy secures EU agreement to reduce its electricity wholesale prices

This GS Utilities Daily focuses on Drax Group: the report sees Drax's Capital Markets Day (23 November 2026) as the next positive catalyst, arguing the company is no longer a low-multiple business heavily exposed to government support at Drax Power Station that expires in FY2031. On GS forecasts, Renewables, Flexible generation & Supply comprise c.90% of EBITDA beyond FY2032, with c.50% generated through investments made in the last 12 months, and Drax is capable of delivering >15% FCF yield p.a. beyond FY2031 even assuming no CFD extension. GS expects Drax to update its 2029 Adj. EBITDA target from £650-800m (ex-BSIF) to £800-950m including BSIF, a c.14% upgrade to consensus at the midpoint. Additional upside could come from utilising the balance sheet to fund its developed pipeline, restarting buybacks in FY2027 with new capital allocation, extracting value from the Drax Power Station site via large-scale data center development, and upgrades to FY2026 on favourable near-term market