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Investing.com - Raymond (NSE:RYMD) James raised its price target on Talen Energy (NASDAQ:TLN) to $405.00 from $399.00 on Monday, while maintaining an Outperform rating on the independent power producer. The stock, currently trading at $374.68 and up nearly 86% year-to-date, has received a Strong Buy consensus from analysts, though InvestingPro data suggests the shares may be overvalued at current levels.
The firm cited Talen’s "compelling mix of stability and upside" with its 10,700 MW portfolio, highlighting the revamped Susquehanna nuclear facility deal that will provide nuclear energy to AWS through 2042. With a market capitalization of $17.1 billion and a Fair Financial Health Score from InvestingPro, which offers 12 additional ProTips about Talen’s growth potential and valuation metrics.
Raymond James noted that with approximately 80% baseload generation, Talen benefits from increasing revenue visibility through long-term power purchase agreements, strong capacity auction results, recent reliability must-run agreements, and downside support via nuclear production tax credits.
The firm also pointed to Talen’s recent $3.8 billion acquisition of approximately 2.9 GW of efficient PJM combined-cycle gas turbines in Pennsylvania and Ohio, which enhances scale with projected 2026 adjusted EBITDA above $1.8 billion and immediate free cash flow per share accretion of 40%.
Raymond James suggested that Talen’s merger and acquisition potential, either as a target or buyer, adds further appeal to the investment case, especially now that the company’s "story and equity currency benefit from the recent AWS deal and strategic CCGT addition."
In other recent news, Talen Energy has announced the acquisition of two combined-cycle gas-fired power plants for a net price of $3.5 billion after tax benefits. The plants, located in Pennsylvania and Ohio, are expected to enhance Talen’s presence in the PJM power market. Following this acquisition, UBS raised its price target for Talen Energy to $399, maintaining a Buy rating, as they estimate the acquisition could add 9% to 16% value based on current PJM capacity prices. Oppenheimer also increased its price target for Talen Energy to $405, despite the company’s second-quarter 2025 EBITDA of $90 million falling short of the $95 million estimate due to an extended outage at the Susquehanna facility.
Additionally, Oppenheimer had previously raised its target to $315 on news of an upsized power purchase agreement with Amazon (NASDAQ:AMZN) Web Services, which is expected to add significant incremental value. Jefferies, however, lowered its price target to $326 due to Talen Energy’s high exposure to the PJM capacity auction, noting a 45% exposure for 2025-2027. Despite the varied analyst responses, Talen Energy’s recent strategic moves have been a focal point for investors.
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