NRG Energy (NYSE:NRG) -2% in Tuesday’s trading as Bank of America downgrades shares to Underperform from Neutral with a $42 price target following the recent rally from a recent low of $36 to ~$46 currently despite few changes to the long-term story and minimal upside exposure to the power rally.
“Our downgrade is principally a valuation call, particularly as power forwards have rallied significantly in recent months, and likely at least some of the improvement in share performance has been driven by investor perceptions that NRG retains some exposure to this dynamic,” BofA’s Julien Dumoulin-Smith writes.
The analyst also remains “slightly cautious” on a number of emerging risks heading into summer as well as in coming years, such as the inability to pass through the full cost of rising power prices to customers, plus tail risks of heat wave-driven power peak pricing events.
NRG Energy (NRG) recently reported Q1 net earnings swung to a $1.73B profit from an $82M loss in the year-earlier quarter.
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