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Vistra (NYSE:VST) -5.6% in Friday’s trading after outlining plans to bolster its natural gas capacity in Texas with 2 GW of dispatchable, natural gas-fired power.
Investors are concerned the added capacity could be “the tip of an oversupply iceberg,” Guggenheim’s Shahriar Pourreza says, according to Bloomberg, but he sees the changes as “somewhat modest.”
But Vistra (VST) shares hit an all-time high earlier in the week and have more than quadrupled during the past year, making it the best performer on the S&P 500 Index – which it joined less than a month ago – and far outgaining utility stocks in the index that returned ~10% over the same period.
“Power demand is extremely strong, and it’s being driven by the data center trade,” but Vistra’s (VST) mix of gas and nuclear power plants make it a “unicorn,” according to Pourreza, who rates the stock as a Buy with a Street-high price target of $133.
Data centers are looking for round-the-clock clean power, and “nuclear plants are a very strong avenue for that,” Pourreza said, according to Bloomberg, adding that investors expect Vistra (VST) will be able to contract its plants directly with data centers, similar to an energy-matching agreement between Constellation Energy (CEG) and Microsoft.
Other potential catalysts could be the company’s first earnings per share guidance and a longer-term outlook from the company, Pourreza said.
Even after the stock’s run higher, Janney analyst Thomas Meric thinks Vistra (VST) screens relatively inexpensive compared to other ways to play the AI and data center booms, noting shares trade ~17x the next year’s earnings, compared to Nvidia’s multiple of 37.