Vistra Energy’s Strategic Acquisition Boosts Market Position and Financial Outlook

Analyst David Arcaro of Morgan Stanley maintained a Buy rating on Vistra Energy (VST – Research Report), retaining the price target of $172.00.

David Arcaro has given his Buy rating due to a combination of factors surrounding Vistra Energy’s recent strategic acquisition. The company announced the purchase of seven natural gas power plants from Lotus Infrastructure Partners, which will add approximately 2,557 MW of gas-fired generation capacity. This acquisition is expected to enhance Vistra’s exposure in the PJM market, increasing its capacity from 33% to 36%, and further diversifying its geographical footprint across key markets such as New England, New York, and California.
Additionally, the transaction is attractively valued at $743 per kilowatt and is expected to be free cash flow accretive in the first year. The deal is funded through a combination of existing cash reserves and debt, maintaining Vistra’s capital allocation strategy, which includes a long-term net leverage target of less than 3x, $300 million in annual dividends, and at least $1 billion in annual share repurchases. The favorable valuation of the acquisition, along with the potential for incremental free cash flow upside, supports the Buy rating given by David Arcaro.

In another report released yesterday, Evercore ISI also maintained a Buy rating on the stock with a $192.00 price target.

Based on the recent corporate insider activity of 55 insiders, corporate insider sentiment is neutral on the stock.