Based on analysts’ estimates, NRG Energy (NRG) stock has a target price of $47.7, which suggests upside potential of more than 9% from its current price of $42.8 over the next 12 months. Morgan Stanley reinitiated its coverage on NRG Energy with an “equal weight” rating and a target price of $46.0 on March 26.
Among the 11 Reuters-surveyed analysts tracking NRG Energy, four recommended a “strong buy,” four recommended a “buy,” and three recommended a “hold.” None of the analysts recommended a “sell” as of March 29.
Among the ten analysts tracking AES (AES), five recommended a “hold,” four recommended a “buy,” and one recommended a “sell.”
Analysts’ median target price of $17.94 for AES implies a potential downside of ~1% compared to its current market price of $18.1 over the next 12 months.
Despite being a component of the Utilities ETF (XLU), NRG Energy stock seems to be a relatively risky bet. NRG Energy’s earnings outlook and financials have improved over the last few years. The company’s valuation also looks appealing. However, NRG Energy’s petty dividends and relatively volatile stock movements make it an exception among utilities.
Usually, investors take shelter under safe-haven utility stocks in search of dividends when the broader markets are rough. American Electric Power (AEP) has been paying dividends for more than 108 consecutive years. To learn more read All You Need to Know about AEP’s Dividend Profile.