UPDATE: Citigroup Downgrades GenOn Energy

Citigroup has published a research report on GenOn Energy GEN and has downgraded the company from Buy to Neutral ahead of the company's merger with NRG Energy NRG. In the report, Citigroup wrote, "We are adjusting our valuation methodology for GEN solely to account for the pending merger with NRG Energy. We recently raised our target price for shares of NRG to $24. We expect a smooth regulatory approval process for the merger scheduled to close January 2013. With this in mind, we are now valuing shares of GEN as a function of NRG's target price using the proposed exchange ratio of 0.1216. The product of this ratio and our $24 target for NRG yields a $2.90 target price for shares of GEN." Citigroup also raised the price target from $2.60 to $2.90 on GenOn Energy, which is currently trading up 0.38 percent from Monday's $2.62 closing price.