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On Tuesday, Jefferies analyst Julien Dumoulin-Smith adjusted the price target for Vistra Energy (NYSE:VST) shares, bringing it down to $145.00 from the previous target of $151.00. Despite this change, the firm maintained its Buy rating on the stock, aligning with the broader analyst consensus of 1.72 (Strong Buy). According to InvestingPro data, VST has delivered an impressive 67.65% return over the past year. Dumoulin-Smith’s commentary highlighted a continued perception of value in Vistra Energy, even after taking into account the downward mark-to-market (MtM) adjustments in commodities.
The analyst revised the forecast for Vistra’s 2027 earnings before interest, taxes, depreciation, and amortization (EBITDA) to $7.15 billion. This adjustment reflects a more conservative outlook yet still anticipates significant earnings growth from the current EBITDA of $6.77 billion. The company’s strong financial position is reflected in its "GREAT" overall health score on InvestingPro, supported by robust revenue growth of 16.54% in the last twelve months.
Dumoulin-Smith also addressed the anticipation of a data center deal for Vistra Energy, which has not been announced to date. The lack of news on this front has contributed to a sell-off from the stock’s highs, which the analyst suggests may offer an attractive entry point for investors since the current market valuation does not heavily factor in potential data center earnings.
The report further elaborates on Vistra Energy’s financial position, noting that the company’s strong free cash flow and hedging strategies offer a buffer against potential downturns. These hedges are seen as providing downside support for the stock.
Lastly, the analyst pointed out that, excluding potential data center earnings, Vistra’s stock holds an attractive risk/reward profile at $117 compared to its current trading price. This view is supported by VST’s notably low PEG ratio of 0.19, indicating attractive valuation relative to growth. According to InvestingPro’s Fair Value analysis, the stock appears undervalued at its current market capitalization of $43.94 billion, presenting a potential opportunity for investors. For deeper insights into VST’s valuation and 12 additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Fitch Ratings has upgraded Vistra Corp.’s Long-Term Issuer Default Ratings to ’BB+’ from ’BB’, with a stable outlook. This upgrade reflects expectations of improved EBITDA leverage due to strong retail performance and favorable power prices in Texas. Vistra’s acquisition of Energy Harbor in 2024 is seen positively by Fitch, enhancing the company’s geographical diversification and generation portfolio. On the analyst front, Goldman Sachs initiated coverage of Vistra Energy with a Neutral rating, noting the company’s high-quality asset base but pointing out valuation concerns. Jefferies analysts adjusted their price target for Vistra Energy to $151, maintaining a ’Buy’ rating and highlighting potential for data center deals. Meanwhile, BofA Securities upgraded Vistra Energy stock to ’Buy’, despite lowering the price target to $152, citing confidence in the company’s core operations and potential regulatory developments. However, Fitch revised Vistra Holdings Limited’s outlook to negative, citing slower-than-expected deleveraging and increased debt from acquisitions. Despite these challenges, Fitch acknowledges Vistra’s stable business profile and expects improvements in EBITDA margins by 2026.
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