Vistra (NYSE:VST) -5.5% in Tuesday’s trading as Jefferies downgraded shares to Hold from Buy with a $230 price target, trimmed from $241, citing concerns about the lack of any announcement for a data center deal for its Comanche Peak nuclear power plant.
Jefferies analyst Julien Dumoulin-Smith said he is moving to the sidelines as the stock trades near its all-time high, now pricing in a 100% probability that Comanche is contracted at $100/MWh and 75% that PJM nuclear assets are contracted at $88/MWh.
Dumoulin-Smith said he maintains a positive view of Vistra’s (NYSE:VST) power business but find it difficult to ignore the growing political risks in Texas and PJM, adding that he has been surprised at the strength in IPPs and lack of Vistra deals specifically.
The analyst said he remains confident on a Comanche deal, but no announcement “gives us a pause,” with his most recent understanding that the agreements would have to go through Texas Senate Bill 6 approval process for co-located large load, adding that the arrangement could require material new gas and is concerned with potential other delays caused by ERCOT system reliability issues.
“Although we see all those potential issues as process related, they are weighing on the
confidence that Vistra can get Comanche and other deals done on timely basis,” Dumoulin-Smith wrote.