Morgan Stanley notes PJM auction results were significantly above expectations, up nearly 10-times for most of the market. The firm calculates a much bigger positive impact to Vista (VST), Constellation Energy (CEG), NRG Energy (NRG), and PSEG (PEG) earnings as a result, and this bodes favorably for future auctions, indicating the market is very tight. Morgan Stanley further highlights the “much bigger positive financial impacts” to the stocks than expected, especially for Constellation Energy at +20% EPS and Vista at +15% EBITDA. The firm sees potential secondary impacts such as higher prices of nuclear contracts with data centers and pushbacks to higher customer bills.
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