Broker snap: Drax is 'stock to avoid'

15th Dec 2009 12:41

Power station operator Drax stays as 'underweight' at JP Morgan based on continuing oversupply in the UK gas market, which keeps electricity prices weak.The broker, which has a 450p price target on the shares, sees Drax as "the stock to avoid in 2010" as UK gas weakness and a healthier global coal market will continue to erode margins and volume.It also worries about the planned investment into biomass will erode the stock's yield attraction and that the firm as the highest carbon risk in the sector.