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Tuesday, AES Corp. (NYSE:AES) shares maintained their Outperform rating with a steady price target of $15.00, as affirmed by Mizuho (NYSE:MFG) analysts. The stock, currently trading at a modest P/E ratio of 5.5, has shown strong momentum with an 8.8% gain over the past week. According to InvestingPro analysis, AES is currently trading near its Fair Value. The endorsement follows recent meetings in New York City between investors and AES CFO Stephen Coughlin, where discussions revolved around the company’s asset divestiture strategy, power purchase agreement (PPA) signings, cost control measures, and the maintenance of its investment-grade (IG) credit rating.
Investors left the meeting with a generally positive outlook on AES, despite the stock not reaching its 12-month peak. Since the fourth-quarter earnings call, the stock has seen a significant recovery, surging roughly 32%. The company maintains an attractive dividend yield of 5.4% and has increased its dividend for 13 consecutive years, according to InvestingPro data. AES boasts a substantial portfolio of 9 gigawatts of datacenter PPAs and remains confident that its renewable energy offerings will provide price certainty to hyperscale customers, contrasting with the longer timelines associated with bringing gas-fired generation facilities online.
Mizuho analysts highlighted the company’s tailwinds and emphasized management’s commitment to achieving their 2025 EBITDA guidance, which projects earnings before interest, taxes, depreciation, and amortization to be in the range of $2.65 to $2.85 billion. This forecast notably excludes any tax attributes, which are estimated to contribute an additional $1.3 to $1.5 billion.
The topic of succession planning was also touched upon during the meetings, with AES reassuring that they have a structured plan in place and anticipate no unexpected changes in leadership.
The reiteration of the Outperform rating and the $15 price target by Mizuho reflects a continued confidence in AES’s strategic direction and its potential for future growth within the energy sector.
In other recent news, AES Corporation has announced plans to issue senior notes in a registered public offering. The proceeds from this offering are intended to fund the repurchase of its 3.300% Senior Notes due in 2025 and manage other outstanding debts. Additionally, AES Corporation has decided to restate its financial results for the second and third quarters of 2024 due to an overstatement of impairment expenses related to its stake in AES Brasil Energia S.A. The restatements do not affect previously reported revenues or net income.
In terms of analyst ratings, BofA Securities upgraded AES Corporation’s stock from Underperform to Neutral, raising the price target to $13. This decision reflects a more positive outlook on AES’s strategic adjustments, including a disciplined approach to capital management. Conversely, Seaport Global Securities downgraded AES stock from Neutral to Sell, setting a price target of $7, citing concerns over the company’s ability to meet its 2027 EBITDA targets. Meanwhile, Mizuho Securities reduced its price target from $16 to $15 but maintained an Outperform rating, highlighting AES’s strategic decisions to streamline operations and focus on high-return projects. These developments reflect a mixed sentiment among analysts regarding AES Corporation’s financial prospects and strategic direction.
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