Bank of America upgrades this energy stock that can get a boost from data center demand

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Bank of America upgrades this energy stock that can get a boost from data center demand

Data centers could drive growth for Vistra , according to Bank of America. The firm upgraded the electricity and power generation stock to buy from neutral, but lowered its price target to $152 per share from $164. BofA’s forecast still implies nearly 23% upside from Monday’s close. Analyst Ross Fowler said the rise and demand for data centers, which are essential components of powering artificial intelligence applications and programs, could be a catalyst for growth outside of the company’s core businesses. “While we do not factor datacenters into our valuation, we believe this could provide upside through the forecast *******,” Fowler said. “We estimate nuclear co-location could add up to $385 mn in EBITDA and would increase the EBITDA compound annual growth rate (CAGR) by at least 1%.” But Vistra doesn’t need data centers in order to find growth ahead, the analyst noted. “We view the base business of baseload generation and competitive retail as well-positioned to benefit from tightening markets in PJM [Pennsylvania-New Jersey-Maryland Interconnection] and ERCOT [Electric Reliability Council of Texas], increasing demand and retail growth, regardless of datacenter deals,” the analyst said. Most analysts are bullish on the stock. LSEG data shows 14 of 15 analysts covering Vistra rate it a buy or strong buy. The average analyst price target implies upside of more than 45%.

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