Jefferies has initiated coverage of AES Corp. (NYSE: NYSE:AES), assigning the stock a Buy rating alongside a price target of $20.00.
The firm highlighted AES's ownership of a diverse global portfolio of energy infrastructure assets, with a strong shift towards US renewables and regulated utilities.
The strategic move away from coal exposure was noted as an improvement in the quality of the company's earnings.
The firm's analysis pointed out that although AES has exhibited underperformance in the stock market, this could be attributed to market skepticism regarding the company's ability to execute its strategy.
However, Jefferies sees this as an opportunity for investors to engage with the US renewable energy sector through AES at what they consider a discounted price.
The analyst underscored the transition of AES toward a majority of its earnings being derived from US renewables and regulated utilities.
This transition represents a significant shift in the company's operations and is expected to enhance the quality of its earnings profile.
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