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What are Analysts Saying about NRG Energy?

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Brokerage ratings for NRG Energy

NRG Energy (NRG) has a Wall Street analyst consensus rating of “strong buy.” Eleven surveyed analysts give it a “buy,” four gave it a “hold,” and no analysts gave it a “sell” rating. The average 12-month price target is $28.00, against a market price of $15.03 as of October 13, implying a potential return of 86.3%.

A fall in NRG’s stock over past few months resulted in the change in ratings and attractiveness of the company’s valuation. The fall also pushed up the dividend yield of the company to 3.75% as of October 13, 2015.

On October 6, 2015, Morgan Stanley (MS) gave NRG a 12-month target price of $36, with implied returns of 139.6%, with an “overweight/in-line” rating, which signals a “strong buy.”

In September 2015, UBS (UBS) gave NRG a “buy” rating with a price target of $20, with implied returns of 33.1%. UBS gave a “buy” rating to Dominion Resources (D) and Dynegy Inc. (DYN) as well.

In September 2015, Credit Suisse (CS) gave NRG an “outperform” rating with a price target of $30, with implied returns of 99.6%.

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Credit ratings for NRG

Since 2006, Moody’s has had a rating of Ba3 on NRG Energy (NRG) with a stable outlook. However, on October 6, 2015, Moody’s downgraded NRG Yield (NYLD), NRG’s yieldco, to Ba2 from Ba1. Moody’s believes that the substantially large drop in NYLD’s stock has resulted in reduced access to capital markets, leading to uncertainty about the company’s future strategy.

Standard and Poor’s (MHFI) has a rating of BB-/Stable on NRG since May 2009. Standard and Poor’s has a rating of BB+ on NYLD. For more information on credit ratings and what these signs mean, please read our overview of credit ratings.

To put this in context, while all major power utilities (XLU) boast investment-grade ratings, NRG and NYLD are rated under junk grade.

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