Analysts Are Still Positive on NRG Energy
Goldman Sachs upgrades NRG Energy
Goldman Sachs upgraded NRG Energy late last month from “neutral” to “buy.” Goldman Sachs gave it a price target of $26.00 from its current price level of $18.73. It implies estimated upside of 39%.
According to Wall Street analysts, NRG Energy’s (NRG) mean price target for the next year is $20.79. It implies an estimated rise of nearly 11.0% in one year from its current price of $18.73.
For investors who missed NRG Energy’s recent rally, the stock might still have attractive upside potential.
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Of the 14 analysts tracking NRG Energy, six recommended a “buy” for the stock, five recommended a “strong buy,” and three recommended a “hold.” None of the analysts gave NRG Energy a “sell” recommendation as of April 13, 2017.
Wall Street analysts’ consensus price target for Southern Company (SO) is $50.71. Its current market price is $49.69, which implies a rise of 2.0% over the next year. Wall Street analysts’ consensus price target for Duke Energy (DUK) is $80.89. Its current market price is $82.26, which implies a fall of nearly 2.0% over the next year.
What’s the downside?
NRG Energy might appear attractive to investors after rising more than 50.0% so far this year. It might be on a growth path after recent activist involvement. However, fundamental weakness among merchant power producers might persist due to poor power demand growth and subdued power prices.
It’s worth noting that merchant stocks could be very volatile, which might lead to capital erosion. However, broader utilities (XLU) tend to offer a better risk and reward proposition compared to merchant stocks. Also, utilities at large have stable stock movements along with stable dividend incomes.
For more on the industry, read These S&P 500 Utilities Offer Big Upsides after the Rate Hike.