NRG Energy May Continue to Please Investors
NRG Energy: Price targets
According to Wall Street analysts, NRG Energy’s (NRG) price target for the next year is $20, which implies an estimated gain of nearly 12% from its current price of $17.89.
Of the 14 analysts tracking NRG Energy, five recommend it as a “buy,” five recommend it as a “strong buy,” and four recommend it as a “hold.” Interestingly, none of the analysts have a “sell” recommendation on NRG Energy as of March 17, 2017. Peer Dynegy (DYN) has a one-year price target of $12, compared with its current market price of $7.51, implying an estimated upside of 61%.
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Merchant power player Calpine (CPN) has a price target of $15.07, compared with its current market price of $11.20. The target implies an estimated upside of 35% during the next year.
NRG Energy: Earnings stability of utmost importance
NRG Energy is indeed an interesting case and the most volatile stock among utilities (XLU). Investors may find it alluring that the stock has gained 45% so far this year and still the potential to rise 12%.
However, it should be noted that merchant power players such as NRG Energy have less stable earnings that may lead to volatile stock price movement. NRG may also be on the growth path after the recent involvement of activist investors Bluescape Energy and Elliott Management. However, fundamental weakness among power producers may persist, considering the poor power demand growth and lower power prices.