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Investing.com - Jefferies upgraded AES Corp. (NYSE:AES) from Underperform to Hold on Monday, raising its price target to $13.00 from $12.00. AES currently trades at $13.92, with a P/E ratio of just 9.15, indicating a low earnings multiple according to InvestingPro data.
The upgrade reflects Jefferies’ recognition of data center opportunities at AES’s U.S. utilities, which the firm believes provides upside potential for the power company.
Jefferies analyst Julien Dumoulin-Smith indicated that while the firm continues to see "significant hurdles to the potential M&A deal," it views $13 per share as a reasonable "floor" for AES shares based on reported enterprise value.
The research note highlighted "renewable data center opportunities including powered land" as a positive development, though Jefferies characterized this as more of a "1x-opportunity" rather than a recurring benefit.
Jefferies emphasized that "pulling levers to improve the balance sheet is key," specifically mentioning the potential sale of FLNC (Fluence Energy) as an important strategic move for AES. This focus on balance sheet improvement appears warranted, as InvestingPro data shows AES operates with a significant debt burden and its short-term obligations exceed liquid assets. Despite these challenges, AES pays a substantial 5.09% dividend yield and has raised its dividend for 14 consecutive years.
In other recent news, The AES Corporation announced its third-quarter 2025 earnings, revealing adjusted earnings per share (EPS) of $0.75, which exceeded the forecasted $0.73. This performance was achieved despite a slight miss in revenue expectations. The company’s emphasis on renewable energy and strategic cost-saving initiatives played a significant role in its strong quarterly results. These developments have been well-received in the market, as reflected in the stock’s positive reaction. Additionally, analysts have noted the company’s strategic focus as a contributing factor to its performance. The AES Corporation continues to prioritize its renewable energy segment, aligning with broader industry trends. Investors are closely monitoring these efforts as they could impact future earnings. The company’s ongoing cost management strategies remain a focal point for analysts and investors alike.
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