Is The AES Corporation a Falling Stock Worth Buying? Analysts Weigh In

The AES Corporation (NYSE: AES) has faced a rocky start to 2025, with its stock price plunging 22.3% year-to-date—far outpacing the broader market’s decline. Yet, despite this stumble, analysts remain cautiously optimistic, with some even labeling it a “best falling stock to buy.” Is there merit to this view, or are investors better off waiting on the sidelines? Let’s dissect the data.

Recent Performance: A Rough Start, But Not Unexpected

AES’s Q1 2025 earnings disappointed, with EPS of $0.27 falling 27% below estimates. Revenue of $2.93 billion also missed projections by 8.6%, driven by one-time costs from organizational restructuring, lower contributions from its Energy Infrastructure segment, and reduced tax benefits. The stock’s 22.3% YTD decline reflects this underperformance. However, management has attributed these results to temporary headwinds, including weather-related grid damage in Indiana and the prior-year windfall from the Warrior Run coal plant PPA monetization.

Analyst Sentiment: A “Moderate Buy” with Contrasting Views

Analysts are divided but broadly constructive. The consensus rating is a “Moderate Buy” (based on 9 Buy, 4 Hold, and 1 Sell ratings), with an average price target of $13.78—35% above its May 2 closing price of $10.18. Notably, JPMorgan and Morgan Stanley maintain Overweight ratings, while Barclays trimmed its target to $22 but kept a bullish stance. Bears, like Jefferies (which downgraded to Hold in April), cite valuation concerns and near-term execution risks.

The divergence hinges on whether investors prioritize short-term misses or long-term growth. Bulls emphasize AES’s 11.7 GW renewable project backlog (5.3 GW under construction) and its $450 million windfall from selling a minority stake in its captive insurance subsidiary, AGIC. This transaction not only met its 2025 asset-sale target but also bolstered liquidity.

Key Risks to Monitor

• Weather and Project Delays: Snowstorms and flooding in Indiana caused operational disruptions in Q1, costing the company millions. Such events could recur, impacting profitability.
• Regulatory Hurdles: Projects like the Crossvine solar-plus-storage facility face delays until 2027, delaying revenue streams.
• Geopolitical Uncertainty: Tariffs and energy policy shifts could disrupt supply chains or project returns.

Catalysts for Optimism

AES’s transition to renewables remains its strongest suit. The company aims for 5–7% annualized EBITDA growth through 2027 and 7–9% EPS growth by 2025–2027. By year-end 2025, it expects to add 3.2 GW to its operating portfolio, with long-term PPAs shielding it from price volatility. Additionally, its regulated utility segment, now contributing 42% of EBITDA, offers steady cash flows.

The dividend—held steady at $0.17595 per share—is another stabilizing factor. While modest, it underscores management’s confidence in liquidity, especially after securing improved credit ratings for AES Ohio.

Technical Analysis: Bearish Near-Term, Bullish Long-Term

Short-term traders face a challenging picture. May’s forecast calls for a drop to $9.54 by month-end, with a Fear & Greed Index of 39 (“Fear”) and an RSI of 34.58 (oversold but not yet signaling a rebound). However, the average 12-month price target of $23.63 (via Fintel) suggests analysts see value in the long run.

Conclusion: A Buy for Patient Investors

AES’s Q1 stumble is undeniably painful, but the fundamentals argue for a strategic buy. The company’s renewable pipeline, disciplined asset sales, and reaffirmed guidance align with its long-term targets. While near-term risks like weather and project delays are real, the 35% upside to the average price target and its $23.63 12-month projection suggest the dips are opportunities to accumulate shares.

Investors should proceed with caution, however. A strict stop-loss (e.g., below $9.40) and a focus on Q2 earnings (where EPS is projected to rebound to $0.46) are prudent. For those with a multiyear horizon, AES’s shift to renewables and robust PPAs make it a compelling contrarian play—a “best falling stock” worth buying during this correction.

Final Call: Hold for now, but consider accumulating on dips below $10.50, with a target horizon of 12–18 months. The long-term story remains intact, but patience is key.