Citi downgrades Drax to 'sell'

Citi downgraded Drax to ‘sell’ on Wednesday as it argued the shares have re-rated "unjustifiably" on the hope of further government support - a view the bank does not share before the general election.

"This appears even more unsustainable economically given cost of biomass, against the backdrop of falling power prices," Citi said.

"With nuclear life extensions and new build gas capacity on the horizon, the argument for Drax to receive further subsidies to support reserve margins is becoming less compelling."

The bank also sees downside risk from the ongoing National Audit Office and Ofgem investigations.