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Investing.com - Oppenheimer raised its price target on Talen Energy (NASDAQ:TLN) to $315.00 from $250.00 on Friday, while maintaining an Outperform rating on the stock. Currently trading at $267.62, the company, with a market capitalization of $12.2 billion, appears fairly valued according to InvestingPro analysis.
The price target increase reflects an upsized power purchase agreement (PPA) between Talen’s Susquehanna facility and Amazon (NASDAQ:AMZN) Web Services (AWS), which Oppenheimer estimates adds approximately $40 per share in incremental value beyond the original agreement’s $32 per share contribution. The stock has shown strong momentum, delivering a 104% return over the past year, with analyst targets ranging from $200 to $366.
Oppenheimer also cited potential for a data center deal at Talen’s Montour facility that could add more than $30 per share in additional value, along with possible merger and acquisition opportunities in the PJM Interconnection market that could help Talen expand its generation capacity. InvestingPro data shows the company maintains a "Fair" overall financial health score, with particularly strong marks in profit and price momentum metrics.
The research firm updated its sum-of-the-parts valuation to reflect the upsized PPA and raised its fiscal year 2026 EBITDA estimate to $1,438 million from $1,276 million, citing both the PPA and a reliability must-run (RMR) agreement.
Oppenheimer identified the upcoming 2026/2027 PJM Base Residual Auction as another potential catalyst, with results expected on July 22, noting the auction could clear near the price cap of $325 per megawatt-day.
In other recent news, Talen Energy has been the focus of several analyst updates and company announcements. UBS increased its price target on Talen Energy to $366, citing strong power fundamentals and a favorable position due to its long-term contract with AWS. This comes after a previous raise by UBS to $296 following an expanded power purchase agreement with Amazon, which is expected to enhance margins and provide contract certainty. On the other hand, Jefferies adjusted its price target down to $326, highlighting potential risks associated with the PJM capacity auction but maintaining a Buy rating due to Talen’s attractive valuation and balance sheet flexibility. Additionally, Oppenheimer reiterated its Outperform rating with a $250 price target, expressing confidence in Talen’s ongoing projects and robust first-quarter projections, buoyed by strong PJM market electricity prices.
Talen Energy also reported an extension of its maintenance outage at the Susquehanna Steam Electric Station, which increased costs by $35 million. Despite this, the company’s financial guidance for 2025 remains unchanged, with expectations that efficiency gains will offset these costs over time. The firm’s CEO emphasized the importance of the maintenance for long-term asset performance. These developments reflect a complex landscape for Talen Energy, with both challenges and opportunities shaping its financial outlook.
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