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On Tuesday, Mizuho (NYSE:MFG) Securities reiterated their positive stance on AES Corp. (NYSE:AES), maintaining an Outperform rating and a price target of $15.00. According to InvestingPro data, AES currently trades at an attractive P/E ratio of 5.5x and offers a substantial dividend yield of 5.39%, making it one of several stocks currently trading below their Fair Value. Following meetings in New York City with AES CFO Stephen Coughlin, the firm’s analysts reported that investor discussions mainly revolved around the company’s strategy for asset divestiture, the ability to secure power purchase agreements (PPAs), effective cost management, and the maintenance of its investment-grade (IG) rating.
The sentiment among investors was reportedly mostly positive, despite AES stock not reaching its 12-month peak of $22.21. The stock has demonstrated strong momentum, with InvestingPro data showing an impressive 8.84% return in the past week, while shares have seen a substantial recovery, ascending approximately 32% since the fourth-quarter earnings call. AES Corp. currently boasts 9 gigawatts (GW) of datacenter PPAs and remains confident that renewable energy sources will offer hyperscalers more price stability compared to gas-fired generation, which is expected to take a significant amount of time to become operational.
Mizuho highlighted the company’s ongoing efforts to achieve its 2025 EBITDA guidance of $2.65 billion to $2.85 billion, which notably does not rely on tax attributes projected to contribute between $1.3 billion and $1.5 billion. The company’s current EBITDA stands at $3.28 billion, with InvestingPro analysis indicating a FAIR overall financial health score. Discover 10+ additional exclusive ProTips and comprehensive financial analysis in the Pro Research Report, available with an InvestingPro subscription. Additionally, the topic of succession planning was touched upon, with AES reassuring that the process will be smooth and well-orchestrated, with no unforeseen changes anticipated.
The endorsement from Mizuho comes as AES continues to navigate the dynamic energy market, focusing on its long-term financial goals and operational strategies. The reaffirmed price target of $15 suggests that Mizuho sees potential for AES stock to perform well in the foreseeable future.
In other recent news, AES Corporation announced plans to issue senior notes in a registered public offering to manage its debt, including repurchasing existing 3.300% Senior Notes due in 2025. This financial maneuver aims to optimize the company’s capital structure. In another development, AES Corp. will restate its financial results for the second and third quarters of 2024 due to an overstatement of impairment expenses related to the sale of its stake in AES Brasil Energia S.A. This adjustment does not affect previously reported revenues or net income.
Analyst actions have varied, with Mizuho maintaining an Outperform rating with a $15 price target, highlighting AES’s asset divestiture strategy and commitment to its 2025 EBITDA guidance. Meanwhile, BofA Securities upgraded AES to a Neutral rating, raising the price target to $13, citing strategic adjustments expected to improve execution visibility. Conversely, Seaport Global Securities downgraded AES to a Sell rating, setting a $7 price target due to concerns about meeting 2027 EBITDA targets and operational issues in its Renewables segment. These analyst ratings reflect differing perspectives on AES’s strategic direction and financial outlook.
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