Jefferies downgraded Vistra Corp. (NYSE:VST) to “hold” from “buy,” cutting its price target to $230 a share from $241, citing delays in a nuclear contract tied to Comanche Peak and the stock’s steep run-up.
The brokerage said Vistra shares have already priced in roughly $70 a share in data center value, equal to about 35% of the company’s stock price.
That includes a 100% probability of a Comanche deal at $100/MWh, a 75% probability that PJM nuclear assets are contracted at $85/MWh, and expectations of robust gas contracting.
“With Comanche nuke deal delayed vs our expectations and shares pricing-in significant upside, we look for a pull-back for better risk/reward,” Jefferies analysts said.
The brokerage flagged that Vistra’s stock, which has climbed 160% in the past year and is trading just below its all-time high, is now assuming a near-perfect outcome on contracting.
Jefferies lowered its price target to $230 to reflect reduced probabilities of future gas-related data center agreements, cutting the assumed chance of such deals to 25% from 40% for about 16 GW of combined-cycle gas turbines in Texas and PJM.
The firm pointed to the lack of data center deal announcements from Vistra this year and heightened affordability and reliability risks.
The analysts said they remain confident in a Comanche agreement, but approval under Texas Senate Bill 6, potential new gas requirements, and system reliability issues at ERCOT present risks for timing.
Despite the downgrade, Jefferies said Vistra’s core business remains strong. EBITDA estimates for 2026 were raised to about $7.4 billion, 6% above consensus, supported by higher power prices in Texas and the addition of Lotus in 2026.
The brokerage expects an update on 2026 guidance, 2027 projections, and capital allocation in Vistra’s third-quarter call.
Valuation concerns also weighed on the downgrade. Jefferies noted that Vistra trades at about a 7.5% free cash flow yield excluding data centers and buybacks, compared to NRG in the teens.
The analysts estimate Vistra could generate more than $9 billion in extra cash through 2027 before buybacks, with balance sheet flexibility below 3x net debt/EBITDA.
Jefferies’ base case assumes all nuclear assets are contracted, with a 75% probability applied to PJM nuclear plants and a 100% probability for Comanche.
The analysts value Vistra Vision, which includes the nuclear fleet, retail, and renewable business, at about $139 a share, including $52 a share from data center-related upside.
In an upside scenario, Jefferies set a $299 target, assuming all nuclear and gas assets are contracted without probability discounts. In a downside scenario, the firm forecast $149, assuming no contracting and lower PJM capacity prices.
Source :
https://www.investing.com/news/stock-market-news/jefferies-lowers-vistra-rating-sees-stock-pricing-in-full-comanche-deal-4252465
