Vistra Corp. (VST), based in Irving, Texas, is a prominent player in retail electricity and power generation, boasting a market cap of $55.3 billion. The company manages a diverse portfolio of power plants and stands out for its innovative energy solutions, including renewable energy and battery storage. With a focus on delivering reliable, sustainable, and affordable energy, Vistra supports homes, businesses, and industries nationwide.
Shares of the independent power producer company have substantially outperformed the broader market over the last year. The stock has gained a whopping % over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 31.8%. In 2024, the stock has gained 301.1%, compared to SPX's 25.8% gains on a YTD basis.
Narrowing the focus, VST also outperformed the Utilities Select Sector SPDR Fund (XLU). The exchange-traded fund has gained 32% over the past year and returned 30.9% on a YTD basis.
Vistra’s robust price action has been fueled by benefits from growing demand for clean electricity, driven by data center development, oil field electrification in the Permian Basin, and increased usage from semiconductor and industrial customers. Moreover, Alphabet Inc.’s (GOOG) investment in Texas data centers and potential nuclear power sourcing presents further growth opportunities.
As of September 30, 2024, Vistra has hedged 100% of its 2024 generation, 96% for 2025, and 64% for 2026, ensuring stability within its guidance range. The company has over 70 sites ready for clean energy projects and recently secured a 20-year license extension for its Comanche Peak nuclear plant.
Moreover, Vistra announced its Q3 earnings on Nov. 7, and its stock jumped 7.8%. It reported earnings of $5.25 per share, surpassing the consensus estimate of $1.24 by 323.4% and marking a 320% increase from $1.25 in the same quarter last year. The top line soared 53.8% from the year-ago quarter to $6.3 billion, also surpassing Street’s expectations by 26.7%.
For the current fiscal year, ending in December, analysts expect VST’s EPS to grow 24.8% to $4.48 on a diluted basis. However, the company's earnings surprise history is mixed. It missed the consensus estimate in three of the past four quarters, while beating on another occasion.
Among the 12 analysts covering VST stock, the consensus rating is a “Strong Buy.” That’s based on 11 “Strong Buy” ratings and one “Moderate Buy.”
This configuration is more bullish than two months ago, with nine analysts suggesting a “Strong Buy.”
On Nov. 22Morgan Stanley (MS) raised Vistra's price target from $135 to $169, while maintaining an “Overweight” rating. The firm adjusted price targets for several utility stocks following the sector's underperformance relative to the S&P 500 in October. Insights from the EEI Financial Conference highlighted concerns about California's regulatory and political risks and limited data center growth.
The mean price target of $159.50 represents a 3.2% premium to VST’s current price levels. The Street-high price target of $231 suggests an upside potential of 49.5%.
