Tuesday, BofA Securities analysts revised their stance on Vistra Energy (NYSE:VST), upgrading the stock from Neutral to Buy, although reducing the price target to $152 from $164. The adjustment comes after Vistra’s shares experienced a significant drop, falling 27% in recent weeks. According to InvestingPro data, the stock has declined over 10% in the past week alone, though it maintains an impressive 120% gain over the past year. This decline has been notably steeper than the broader market, with Vistra’s performance lagging behind the S&P 500 and the Utility Index by over 9% and 14%, respectively.
Analysts pointed to the absence of new datacenter announcements as a key reason for the stock’s underperformance. Despite this, BofA Securities believes that Vistra’s core operations, which include baseload generation and competitive retail, are well-positioned to benefit from the tightening energy markets in PJM and ERCOT regions. They also anticipate that these areas will see increased demand and retail growth, irrespective of specific datacenter contracts.
The firm also noted potential regulatory and legislative developments that could positively impact Vistra. Clarity expected from the Federal Energy Regulatory Commission (FERC) and the Texas legislature is anticipated to advance datacenter deals, which BofA Securities suggests could be a catalyst for the company’s stock.
BofA Securities’ upgrade reflects their confidence in Vistra’s fundamentals and future prospects. They believe that the market has not fully appreciated Vistra’s potential, as indicated by the stock’s current valuation. The new price target of $152, despite being lower than the previous target, still implies a level of optimism about the company’s ability to recover and grow in the forthcoming period. InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $52 to $231 per share. For deeper insights into Vistra’s valuation and 12+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Vistra Energy Corp reported robust fourth-quarter 2024 earnings, significantly surpassing analyst expectations. The company achieved an earnings per share (EPS) of $2.38, which was notably higher than the projected $1.39, and its revenue reached $17.22 billion, far exceeding the anticipated $3.72 billion. For the full year, Vistra’s adjusted EBITDA was reported at $5.66 billion, surpassing its guidance, and the company has set its 2025 adjusted EBITDA guidance between $5.5 billion and $6.1 billion. Meanwhile, Fitch Ratings revised the outlook on Vistra Holdings Limited’s Long-Term Foreign-Currency Issuer Default Rating from Stable to Negative, citing a slower deleveraging pace and higher-than-expected net leverage. Despite these challenges, Fitch affirmed Vistra’s ratings due to its stable business profile and steady revenue growth. The agency anticipates Vistra’s EBITDA margin could improve from 34% in 2024 to 37% by 2026. Additionally, Vistra’s merger with Tricor Group in July 2023 has bolstered its market position, creating a platform with expanded geographical and service coverage.
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