Vistra Stock Slides After Jefferies Downgrade Over Valuation Concerns
Analysts shift to 'Hold' rating, citing peak valuation and unrealized data center catalyst for its nuclear facility, despite recent company growth.
Shares of Vistra Corp. (VST) declined on Tuesday after analysts at Jefferies downgraded the power generation company to 'Hold' from 'Buy', fueling concerns that the stock's impressive run has pushed its valuation to a peak. The firm also trimmed its price target on Vistra, citing the failure to secure a key data center agreement as a missing catalyst for further growth.
The downgrade contributed to a challenging session for Vistra, with the stock trading near all-time highs before the adjustment. over the company's ability to lock in a large-scale data center client for its Comanche Peak nuclear facility have tempered expectations. The lack of a deal, which was anticipated by the market, removes a significant potential driver for the stock in the near term, according to the analyst note.
The move from Jefferies stands in contrast to a largely bullish sentiment from other Wall Street firms in recent months. Vistra has been executing on several strategic initiatives, including a dual listing on the NYSE Texas and reporting strong second-quarter EBITDA that surpassed consensus estimates. BMO Capital and Scotiabank have recently reiterated 'Outperform' ratings, pointing to the company's solid operational performance and strategic growth in its Vistra Zero renewables segment.
Despite the positive operational backdrop, the downgrade highlights a potential ceiling for the stock's value. Vistra's shares have seen a significant rally, and whether future growth is already priced in. The company itself has been actively returning capital to shareholders, with a consistent dividend and billions in share repurchases over the past few years.
Investors will now be closely watching for any developments on the data center front and how Vistra navigates a market that is becoming increasingly sensitive to high valuations. While the company's fundamentals remain robust, for a stock that has been a top performer in the utility sector.