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Investing.com - Jefferies raised its price target on NRG Energy (NYSE:NRG) to $198.00 from $176.00 on Monday, while maintaining a Buy rating on the energy company’s stock. The stock has already delivered impressive returns, surging nearly 90% year-to-date and trading near $169, according to InvestingPro data.
The price target increase reflects higher power and PJM capacity assumptions, along with lower cash taxes and financing costs, according to Jefferies.
The investment firm expressed confidence in the approval of NRG’s "transformational" acquisition of LS Power assets, projecting $1.9 billion average EBITDA for 2028-29 from the deal’s 13 gigawatts of gas generation assets and a demand-side management platform.
Jefferies noted that NRG’s upcoming third-quarter update will reflect stand-alone results without including the pending acquisition.
The firm believes NRG stock continues to offer "an attractive entry point" as it trades at a 13% free cash flow yield compared to peers in the mid-single digits, with potential upside from data center demand not yet priced into the shares.
In other recent news, NRG Energy, Inc. has completed the sale and issuance of $4.9 billion in senior notes, as detailed in a Securities and Exchange Commission filing. This move is part of NRG Energy’s strategy to fund its acquisition of Lightning Power and related entities. The notes include $1.25 billion in secured notes, split between $625 million of 4.734% senior secured first lien notes due 2030 and $625 million of 5.407% senior secured first lien notes due 2035. Additionally, $3.65 billion in unsecured notes were issued, comprising $1.25 billion of 5.750% senior notes due 2034 and $2.4 billion of 6.000% senior notes due 2036.
In further developments, NRG Energy has entered into a strategic agreement with LandBridge Company LLC regarding a potential data center site in Reeves County, Texas. This agreement includes plans for a possible 1,100 MW grid-connected natural gas power generation facility. Additionally, Scotiabank has initiated coverage on NRG Energy with a Sector Outperform rating and a $212 price target, highlighting the company’s attractive valuation. These developments reflect NRG Energy’s ongoing strategic initiatives and market positioning.
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