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Scenery (New York Stock Exchange: FST) -5.6% in trading on Friday after outlining plans to boost its natural gas capacity in Texas with 2 gigawatts of dispatchable natural gas-fired capacity.
Investors are concerned that the additional capacity could beThe tip of the iceberg of excess supply“, “Shahryar to Guggenheim But he sees the changes as “fairly modest,” Porreza says, according to Bloomberg.
But shares of Vistra (VST) hit all-time highs earlier in the week and have more than quadrupled over the past year, making it the best performer on the S&P 500 — which it joined less than a month ago — and far outpacing utility. Stocks in the index that returned approximately 10% over the same period.
“Energy demand is very strong, and it's being driven by data center trading,” but Vistra (VST)'s mix of gas and nuclear power plants makes it a “unicorn,” according to Porreza, who rates the stock a buy with a Street price target of $133.
Data centers are looking for clean energy around the clock, and “nuclear plants are a very powerful way to do that,” Porreza said, according to Bloomberg, adding that investors expect Vistra (VST) to be able to contract directly with its data center factories, similar to Energy Matching Agreement between Constellation Energy (CEG) and Microsoft.
Other potential catalysts could be the company's first guidance on earnings per share and the company's long-term outlook, Porreza said.
Even after the stock's rise, Janney analyst Thomas Merrick believes Vistra Displays (VST) are relatively inexpensive compared to other ways to power the AI and data center booms, noting that the stock trades at roughly 17 times next year's earnings, compared to Nvidia's multiple of 37.