BofA Securities Starts Vistra Energy (VST) at Neutral

BofA Securities analyst Ross Fowler initiates coverage on Vistra Energy (NYSE: VST) with a Neutral rating and a price target of $206.00.

The analyst comments "We reinstate coverage of Vistra Corp. (VST) with a Neutral rating. Vistra is the largest competitive residential retail electricity provider and power generator in the US. While its dominance in retail provides a natural hedge to the generation business, it also limits upside. This is because while increasing power prices would lead to higher generation margins, they would also lead to compressed retail margins due to the higher cost of energy. Furthermore, in our view Vistra has limited protection from the nuclear PTC, since only 20% of its EBITDA is exposed to it, which leaves more potential downside volatility to its generation business if demand does not materialize as expected. Our valuation methodology uses ~11x EV/EBITDA which is a relative high point compared to the traditional mid-cycle and average multiple of VST over the last five years of ~7.1x. As such, we believe much of the upside has already been priced in and while EBITDA will grow, growth is likely to be more limited at ~8%, leading to our rating."

For an analyst ratings summary and ratings history on Vistra Energy click here. For more ratings news on Vistra Energy click here.

Shares of Vistra Energy closed at $191.11 yesterday.

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