Vistra Downgraded by Jefferies, Comanche Peak Deal Uncertainty

Vistra has been downgraded to Hold from Buy by Jefferies, with a price target of $230, trimmed from $241. The downgrade is due to the lack of any announcement for a data center deal for its Comanche Peak nuclear power plant. The company's stock price fell 5.5% in Tuesday's trading.

Vistra Energy Inc. (NYSE: VST) faced a significant setback in Tuesday's trading as Jefferies downgraded its shares to Hold from Buy, reducing the price target to $230 from $241. The move came amidst concerns about the lack of any announcement regarding a data center deal for Vistra's Comanche Peak nuclear power plant Vistra downgraded at Jefferies with Comanche Peak nuke deal priced in^[1].

Analyst Julien Dumoulin-Smith at Jefferies cited the absence of a deal announcement as a primary reason for the downgrade. He expressed uncertainty about the probability of the Comanche Peak contract being priced at $100/MWh, which now stands at a 100% likelihood, and the 75% chance that PJM nuclear assets will be contracted at $88/MWh. Dumoulin-Smith maintained a positive outlook on Vistra's power business but highlighted growing political risks in Texas and PJM as well as the strength in independent power producers (IPPs) without specific Vistra deals.

The analyst also noted that the Comanche Peak deal could require Texas Senate Bill 6 approval for co-located large load, which might necessitate material new gas and could face delays due to ERCOT system reliability issues. Despite considering these issues as process-related, Dumoulin-Smith acknowledged that they are impacting confidence in Vistra's ability to secure deals in a timely manner.

Vistra's stock price fell by 5.5% in Tuesday's trading, reflecting the market's reaction to the downgrade and the uncertainty surrounding the Comanche Peak deal. The company's stock had been trading near its all-time high before the downgrade.

Investors should closely monitor any developments regarding the Comanche Peak deal and Vistra's ability to navigate political and regulatory challenges in Texas and PJM. The market's confidence in Vistra's deal-making capabilities will be crucial in determining the company's stock performance moving forward.