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Investing.com -- Drax Group (LON:DRX) traded higher on Thursday after it raised its full-year 2025 earnings guidance in its first-quarter trading update, citing a shift in renewable obligation certificate (ROC) generation into the current year.
The electric services company expects earnings to hit the top end of the consensus estimate of £848 million to £896 million, with Morgan Stanley (NYSE:MS)’s estimate of £889 million.
The upward revision represents a 2.5% increase over the consensus median of £874 million. “We understand guidance uplift to be driven by a re-profiling of some ROC generation from 2024 into 2025,” said analysts at Morgan Stanley.
Drax maintained its post-2027 EBITDA guidance of £600 million to £700 million. The firm also provided updates on its major projects.
The company said it would not participate in the initial phase of the U.K. government’s cap-and-floor scheme for long-duration energy storage at its Cruachan 2 pumped hydro facility, citing ongoing uncertainty around capital cost recovery.
Morgan Stanley had previously assigned approximately £150 million of value to this project in its sum-of-the-parts valuation, or about 5% of group enterprise value.
Progress continues on the company’s new open-cycle gas turbine (OCGT) assets, with Drax now targeting first power from one unit in the summer of 2025 and the remaining two by year-end.
Analysts suggested this indicates a slight delay from previous expectations, attributing the shift to grid connection issues.
No new information was provided on a potential battery acquisition, where Drax was recently outbid, or on the company’s ongoing negotiations to extend its contracts for difference (CfD) beyond 2027. Drax is targeting a signed CfD extension agreement by summer 2025.