ISI Lowers PT on NRG Energy to $24.50 From $27
November 30, 2011 1:01 PM
International Strategy & Investment Group lowered its price target on NRG Energy (NYSE: NRG) to $24.50 from $27 today, but reiterated a buy rating on the stock. Declining natural gas prices prompted the price target cut, ISI said in a research note.
“NRG looks to be efficiently priced to the current commodity curve and ISI has a constructive view of longer-term gas fundamentals (LT forecast of $5.50 / mmbtu). In the meantime NRG is well hedged through 2013, and the Reliant retail business should offer ballast in the form of higher margins to offset lower wholesale pricing. Cash flow generation will remain strong over the next few years (17% FCF yield), and NRG will be in a position to repurchase > $500m / year of stock (10% of its market cap) once the '17 bonds are called in January and the restrictive covenants removed,” ISI said in the note.
