Vistra (VST) +5.4% in Friday’s trading as Goldman Sachs upgraded the power generation company to Buy from Neutral with a $205 price target, following the stock’s recent pullback and after the bank incorporated the Meta power purchase agreement into its forecast, which increased its FY 2027 EBITDA estimates by 5%.
Goldman’s Carly Davenport said the Meta deal signals that Vistra (VST) is able to secure sizeable PPA contracts with a shorter ramp, even in the face of continued policy uncertainty and affordability rhetoric; before the Meta PPA, Vistra had announced just one other PPA with an undisclosed hyperscaler for half of Comanche Peak’s nuclear generation and minor impact to EBITDA.
In addition to PPA upside potential, Davenport sees downside protection to the stock, saying Vistra’s (VST) current stock price implies an average $49/MWh future power price on a two-year average multiple, below the current forward average of ~$58/MWh, essentially implying limited upside around incremental PPAs or appreciation in power prices.
The analyst also believes valuation is near trough levels, with the stock trading at 8.1x 2027 EBITDA following the pullback, driven by broader weakness in the power/AI trade, affordability concerns, and related risk around signing PPAs, despite further M&A optionality and this year’s Meta PPA.
Finally, Davenport said she remains constructive on the fundamentals of Vistra’s (VST) existing business, with current volume hedging levels, retail operations and capacity revenues lowering the volatility of the business.