Vistra Stock Has Tripled This Year. There's More Upside, Says Analyst -- Barrons.com

By Tae Kim

Stock in Vistra, up 256% this year, still doesn't reflect how much the nuclear-power company stands to benefit from rising demand for electricity from AI data centers, according to Jefferies.

"We continue to see value in the stock despite the recent run-up," analyst Julien Dumoulin-Smith wrote on Thursday. "The shares are undervalued and the market is not properly appreciating Vistra's potential upside."

He reiterated his Buy rating on Vistra shares and raised his price target for the stock to $167 from $143. In mid afternoon Friday, Vistra stock was up 1.8% to $141.01, while the S&P 500 was 1.5% lower.

Vistra is the second-largest owner of independent nuclear power plants. Only Constellation Energy is bigger.

That positions Vistra well. There have been a flurry of deals in the energy sector as large technology companies hunt sources of power for their data centers.

Last month, Alphabet's Google and Amazon.com agreed in separate deals to help finance the construction of small nuclear reactors that would power data centers as early as 2030. These agreements follow Microsoft's deal with Constellation Energy to purchase power from a restarted reactor at Three Mile Island.

Dumoulin-Smith predicts Vistra will win its fair share with its substantial assets in nuclear and natural gas.

Last week, the company's stock dipped when a federal commission ruled that Amazon's plan to plug a data center directly into a Vistra-owned nuclear reactor in Pennsylvania shouldn't go forward as proposed. But the shares reversed higher after Donald Trump's election victory, in response to hope for further energy deregulation.

The analyst said the company's management wasn't dismayed by the commission's ruling and was still optimistic about winning more data center contracts. "Vistra continues to hold active discussions with prospective large load customers on a variety of potential deal structures," he wrote.

Write to Tae Kim at tae.kim@barrons.com

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November 15, 2024 15:41 ET (20:41 GMT)

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