NRG Energy Inc . (NYSE: NYSE:NRG) saw its price target increased by an analyst at BMO Capital from $88.00 to $90.00 while retaining a Market Perform rating on the stock.
The adjustment follows NRG Energy's announcement last week, where the company increased its FY24 EBITDA midpoint outlook by 5%. This update exceeds the analyst's and consensus estimates by 2.5% and 4.3%, respectively.
The company also adjusted its CFO and FCFbG projections upward by 5%, with the FCFbG conversion ratio remaining steady at approximately 55-58%.
In response to these positive developments, BMO Capital has modestly raised its 2024 estimates for NRG Energy's earnings by about 3.0% to $3,625 million.
This revision reflects the analyst's expectation of higher sustainable load-serving margins, which aligns with previous revisions made for other companies in the independent power sector, such as Vistra Corp (NYSE: VST) and Constellation Energy Generation (NASDAQ: CEG).
The new Market-to-Market (MTM) and Sum-of-the-Parts (SOTP) target price of $90, up from $88, is indicative of the analyst's view that the stock will continue to perform at the market level.
In other recent news, NRG Energy, a Fortune 500 company, has raised its financial outlook for 2024, signaling a boost in both its Adjusted EBITDA and Free Cash Flow before Growth (FCFbG) projections.
The company's revised forecast is backed by its solid financial and operational performance throughout the year. In parallel, Jefferies has initiated coverage of NRG Energy with a Hold rating and a price target of $78, citing a balanced risk/reward profile and a forecast of 2-4% base business growth.
BMO Capital has also maintained a Market Perform rating on NRG Energy's shares with a steady price target of $88, noting that the company surpassed quarterly expectations with an adjusted EBITDA of $935 million.
In acquisition news, Gamut Capital Management is set to acquire Airtron Heating & Air Conditioning from NRG Energy, although the specifics of the acquisition have not been disclosed.
In another development, NRG Energy has been shortlisted by the Public Utility Commission of Texas for a share of $5.38 billion in funding for gas-fired power plant projects. Lastly, NRG Energy has expanded its accounts receivable securitization facility to $2.3 billion, introducing Direct Energy Services, LLC as a new originator.
InvestingPro Insights
NRG Energy's recent positive outlook aligns with several key metrics and insights from InvestingPro. The company's stock is currently trading near its 52-week high, with a remarkable year-to-date price total return of 79.74% as of the latest data. This performance is consistent with the company's increased EBITDA outlook and the analyst's raised price target.
InvestingPro Tips highlight that NRG has been aggressively buying back shares and offers a high shareholder yield, which could be contributing factors to the stock's strong performance. Additionally, the company's net income is expected to grow this year, supporting the positive financial projections.
For investors considering NRG Energy, it's worth noting that the stock is trading at a P/E ratio of 9.91, which InvestingPro identifies as a low earnings multiple. This could suggest potential value for investors, especially in light of the company's improved financial outlook.
InvestingPro offers 13 additional tips for NRG Energy, providing a more comprehensive analysis for those seeking deeper insights into the company's financial health and market position.
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