- NRG Energy (NRG -1.5%) is downgraded to Hold from Buy with a $45 price target at Deutsche Bank (DE:DBKGn) on valuation, as shares have nearly quadrupled since November 2016 compared to the S&P 500's ~25% rise.
- Deutsche Bank says NRG has dramatically transformed its business during the period, transitioning from a sprawling energy empire with ~50 GW of assets nationwide, funded by tens of billions of debt, and a high cost base to a lean integrated power company with a stronger balance sheet and excess cash.
- The firm notes the last of NRG's major asset sales are expected to close in the coming days, after receiving final regulatory approval earlier this month, and activists such as Elliott and Bluescape that sparked the transformation have turned their attention elsewhere, and it sees no company specific near-term catalysts on the horizon.
- Deutsche believes NRG shares are pricing in near-perfect execution at current levels, and it sees more attractive valuations elsewhere in merchant power.
- Now read: Crash Protection For NRG Energy
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