Vistra stock price target raised to $207 from $160 at UBS on power demand

UBS raised its price target on Vistra Energy (NYSE:VST) to $207 from $160 on Monday, while maintaining a Buy rating on the power company’s stock. Currently trading at $177.20, VST has demonstrated remarkable momentum with a 112.61% return over the past year. According to InvestingPro data, the company has received positive sentiment from analysts, with multiple upward earnings revisions for the upcoming period. The significant increase reflects what the firm describes as a "strong fundamental backdrop" for the power sector.

The investment bank cited several factors for its more bullish outlook, including "more visible demand, lack of supply response and bias higher in pricing." With current enterprise value to EBITDA at 11.79x and trailing twelve months EBITDA of $6.76 billion, UBS increased the multiple it applies to Vistra’s non-nuclear generation EBITDA to 9.75x from 8.0x, representing a 30% premium versus the 7.5x historical average.

UBS believes the power sector is experiencing a "demand pull" backdrop, with upward pressure on wholesale power prices and potential growth opportunities from future contracting for gas assets. These factors support the higher valuation for Vistra, according to the firm’s analysis.

The research note acknowledged ongoing market debate about how much upside remains for Vistra and what factors are already priced into the stock. UBS indicated that while some yet-to-be-announced deals may be factored into the current stock price, the market will likely sustain higher multiples for independent power producers.

This higher valuation expectation stems from improving stability and duration of cash flows through contracting opportunities, combined with steadily increasing demand and limited near-term supply response options in the power sector, UBS explained in its rationale for maintaining the Buy rating. With a "GREAT" financial health score from InvestingPro, Vistra shows strong fundamentals. Discover 12 additional exclusive ProTips and comprehensive valuation analysis in the Pro Research Report, available to subscribers.

In other recent news, Vistra Energy Corp reported its Q1 2025 earnings, revealing a significant shortfall in earnings per share (EPS) and revenue compared to market expectations. The company posted an EPS of $0.45, missing the forecasted $1.19, while revenue came in at $3.93 billion against a forecast of $4.46 billion. Despite this earnings miss, Vistra reaffirmed its 2025 adjusted EBITDA guidance of $5.5 billion to $6.1 billion. Meanwhile, Vistra Corp announced the acquisition of seven natural gas generation facilities from Lotus Infrastructure Partners for $1.9 billion. The acquisition is expected to be accretive to Vistra’s Ongoing Operations Adjusted Free Cash Flow before Growth per share from the first year following the closing. In other developments, Moody’s Ratings downgraded Vistra Holdings’ corporate family rating to B2 from B1, citing high financial leverage and slower-than-expected improvement in earnings. The rating agency revised the outlook for Vistra from negative to stable, projecting gradual improvement in the company’s financial ratios over the next few years.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.