Talen Energy (TLN) PT Raised to $295 at JPMorgan

JPMorgan analyst Jeremy Tonet raised the price target on Talen Energy (NASDAQ: TLN) to $295.00 (from $288.00) while maintaining a Overweight rating.

The analyst comments "After speaking with the company, we update our 4Q24 and 2024 adj EBITDA estimates to $167mm (Street median $165mm) and $773mm (Street median $772mm), respectively. Expected YoY drivers include an uplift from PTCs, a lower hedge benefit, and no ERCOT earnings following the TX gas plant sales (not a significant contributor previously). While TLN may tweak its 2025 guidance and 2026 outlook from the Investor Day, we do not expect material changes or any incremental long-term outlooks. Here, the RMR settlement for Brandon Shores and H.A. Wagner to operate until May 31, 2029 screens as one logical area for refresh. The settlement provides TLN an annual $145mm ($312/MW-day) to operate Brandon Shores and $35mm ($137/MW-day) to operate H.A. Wagner, representing an aggregate $180mm (versus $200mm initially proposed and $140mm JPMe). While still requiring FERC approval, we view the settlement as a positive for TLN in providing stable fixed payments and increasing its share of stable/contracted cash flow. FERC’s technical denial of the request to rehear the amended ISA will likely drive conversation on the call, but we continue to emphasize that TLN has time to find a commercial or legal solution while supplying AWS with the already approved 300MW through 2027. More broadly, also topical is 1) any updated federal regulatory outlook for serving large load given the new administration and Commissioner Christie now chairing FERC, 2) PJM’s recent capacity auction price cap agreement with Gov. Shapiro, 3) and Calpine’s intention to sell four PJM power plants (totalling 3,546MW) as part of CEG’s acquisition, to the extent this may present a potential inorganic growth opportunity."

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