Evercore: NRG Energy (NRG.US) stock price has reached a new high but is still undervalued, with the target price raised to $126.

According to Zhitong Finance, NRG Energy (NRG.US) reached a new record high on Tuesday, with Evercore ISI raising its price target from $74 to $126 and upgrading its rating from "Hold" to "Overweight", believing the stock is still undervalued compared to peers even after a strong performance in 2024.

Durgesh Chopra, an analyst at Evercore, said NRG Energy's target for annual earnings per share growth is over 10%, and the company will return $8.8 billion in capital to shareholders through dividends and share repurchases by 2029. He added that the market underestimates the potential of the company's plan because NRG Energy should further benefit from growing electricity demand and higher electricity prices.

Chopra said the integration of Vivint is largely complete, and the business provides a stronger value proposition for NRG Energy: the user base has increased by about 200,000 since the transaction completed in the first quarter of 2023, and the revenue per user has increased by about 10%, and the already attractive margin has been further improved by about 100 basis points - these results should be improved considering NRG Energy's about 90% user retention rate and optimized pricing strategy.

The analyst also noted that NRG Energy's cooperation with Renew Home and Google to develop 1 gigawatt of residential VPP in Texas in the third quarter of 2024 will enable NRG Energy to develop energy management solutions for customers through smart thermostats, allowing customers to save money and optimize energy use while providing enhanced grid stability.