Vistra Energy: A High-Conviction Buy Amid Nuclear Growth and EBITDA Expansion

The energy sector is undergoing a seismic shift, driven by surging demand for clean power, AI-driven industrial growth, and regulatory tailwinds favoring resource adequacy. Amid this backdrop, Vistra Energy (NYSE: VST) has emerged as a standout play, with analysts at Bank of America (BofA) and BMO Capital upgrading their price targets to reflect a compelling re-rating of the company's valuation. At the heart of this optimism lies Vistra's strategic positioning in nuclear energy, particularly the potential for a 20-year power purchase agreement (PPA) at its Comanche Peak nuclear plant, and a robust EBITDA growth trajectory that positions it as a high-conviction long-term infrastructure investment.

Strategic Valuation Re-Rating: The Comanche Peak Catalyst

BofA and BMO's recent upgrades—from $214 to $220 and $191 to $229, respectively—underscore a fundamental shift in how the market values Vistra's nuclear assets. BofA's analysis, in particular, highlights a discounted cash flow (DCF) model that incorporates a hypothetical 20-year PPA for Comanche Peak, assuming a power price of $90/MWh for half the plant's 1.2 gigawatt capacity. This scenario, while not yet finalized, introduces a stable, long-term revenue stream that could significantly enhance Vistra's earnings visibility.

The Comanche Peak facility, a cornerstone of Vistra's nuclear portfolio, is uniquely positioned to benefit from the growing demand for zero-emission baseload power. With the U.S. grid facing capacity shortages and policymakers prioritizing decarbonization, nuclear assets like Comanche Peak are gaining strategic value. BofA's DCF assumptions reflect this reality, factoring in a 50% premium on gas prices and mark-to-market power pricing that align with the 2026/2027 capacity auction results. These adjustments signal a market that is increasingly willing to pay a premium for assets with predictable cash flows and low carbon footprints.

EBITDA Growth: A Roadmap to $7.4 Billion

Vistra's EBITDA projections paint a picture of accelerating growth. BofA forecasts EBITDA to jump from $5.79 billion in 2025 to $7.39 billion in 2027, driven by the Comanche Peak PPA, higher realized power prices, and the company's dual-fuel strategy. BMO Capital, meanwhile, cites Q2 2025 EBITDA of $1.349 billion—surpassing both consensus and its own estimates—as evidence of the company's operational strength.

The firm's ability to outperform expectations, even in a challenging earnings quarter, highlights its resilience. While Q2 2025 EPS fell short, the underlying fundamentals remain intact. Vistra's Ongoing Operations Adjusted EBITDA guidance for 2025 is now $5.5 billion to $6.1 billion, with the 2026 midpoint raised to over $6.8 billion. These figures, combined with a $1.8 billion shareholder return plan by 2026, suggest a company that is not only growing its top line but also prioritizing capital efficiency.

Market Dynamics and Policy Tailwinds

The re-rating of Vistra's valuation is not occurring in a vacuum. Several macroeconomic and policy-driven factors are amplifying the company's appeal:
1. Resource Adequacy Concerns: Grid operators are increasingly prioritizing capacity markets to ensure reliability, creating a favorable environment for long-term PPAs.
2. AI-Driven Energy Demand: The exponential growth of data centers is driving a surge in electricity demand, with nuclear plants like Comanche Peak offering a scalable, emissions-free solution.
3. Clean Energy Policies: Federal and state-level incentives for decarbonization are accelerating the transition to nuclear and renewables, positioning Vistra's dual-fuel model as a strategic advantage.

BofA's inclusion of a $329.17/MW-day capacity price in its DCF model reflects these dynamics, while BMO's emphasis on the 2026/2027 Base Residual Auction underscores the importance of regulatory frameworks in shaping Vistra's future cash flows.

Investment Thesis: A High-Conviction Buy

For investors seeking exposure to the energy transition, Vistra Energy offers a rare combination of growth, stability, and strategic alignment with macro trends. The upgraded price targets from BofA and BMO—both maintaining Buy/Outperform ratings—reflect a consensus that the company's intrinsic value is being underappreciated in the current market.

The key risks, such as the uncertainty around the Comanche Peak PPA and potential regulatory headwinds, are outweighed by the company's strong balance sheet, diversified generation mix, and ability to capitalize on capacity market dynamics. With a forward P/E ratio of ~12x and EBITDA growth projected to outpace peers, VST is trading at a discount to its intrinsic value.

Conclusion

Vistra Energy is a masterclass in strategic re-rating. By leveraging its nuclear assets, dual-fuel capabilities, and a favorable regulatory environment, the company is poised to deliver outsized EBITDA growth and shareholder returns. As the energy sector pivots toward reliability and sustainability, VST represents a high-conviction buy for investors with a long-term horizon. The Comanche Peak PPA, if finalized, could be the catalyst that propels Vistra into a new valuation tier—making it a compelling addition to any energy infrastructure portfolio.