BofA Securities analyst Julien Dumoulin-Smith believes NRG Energy Inc NRG analyst day key pointers exceed Street expectations and reiterated a Buy rating on the stock with the price objective of $42.
The analyst sees the company's cumulative cash flow target of around $10.5 billion ($8.3 billion shareholder return and $2.5 billion in debt reduction) exceeding their cumulative estimates of $9.7 billion for FY23-FY27 + net cost savings of $425 million.
The analyst believes the 17% of the FCF (through five years) to be entirely driven by the recent acquisition of Vivint Smart Home Inc, implying around 18% annualized FCF yield on the Vivint acquisition.
Related: NRG Energy Bolsters Retail Platform Via $5.2B Vivint Smart Home Deal - What's On The Cards?
The analyst expects half of the growth capital ($700 million) to be used for three new gas plants in Texas.
The analyst believes 5-year targets of cumulative shareholder returns of $6.9 billion assume increasing share price.
Smith estimates EPS of $8.61 for 2023, $7.34 for 2024, and $5.47 for 2025.
Also Read: Activist Investor Pressures NRG Energy To Change CEO: Report
Price Action: NRG shares are trading higher by 3.53% at $35.08 on the last check Thursday.
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