Guggenheim Upgrades Vistra Energy (VST) to Buy
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Guggenheim analyst Shahriar Pourreza upgraded Vistra Energy (NYSE: VST) from Neutral to Buy with a price target of $24.00.
The analyst commented, "We are upgrading VST to BUY from NEUTRAL based on our view that the shares’ persistently high FCF yield does not reflect what should be increasing comfort around the medium-term viability of VST’s FCF generation, and ultimately, the terminal value question. While we remain cognizant of investor sensitivities around the durability of IPP FCFs over longer timeframes in a decarbonizing world, we believe that, in the case of VST, such a focus ignores that the company’s modern fleet and retail business will generate sufficient capital in the medium term to buy back the entire market cap of the company and simultaneously make modest investments in growth. Our updated thesis is supported by key developments in both policy and commodities in recent weeks, buttressed by our view that 1H21 grid events in Texas and California are only further underscoring the need for a reliable transition. In the event public markets remain wary of the integrated IPP model, we still see breakup value in shares. Reinstating our PT at $24."
Shares of Vistra Energy closed at $18.32 yesterday.
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