Equities

Vistra Surges 139% YTD, Bullish $117 Target Amid AI Boom

Vistra's stock up 139% YTD, driven by AI demand and nuclear power acquisitions, with a $32 billion market cap.

By Bill Bullington

7/11, 10:37 EDT
Constellation Energy Corporation
Vistra Corp.
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Key Takeaway

  • Vistra Corp. (VST) has surged 139% YTD, driven by AI demand and electrification trends, making it the third-best performing S&P 500 stock.
  • The company’s diverse energy mix and recent $3.4 billion nuclear plant acquisition position it well for premium pricing with data centers.
  • Wall Street is bullish on Vistra with an average price target of $117, implying a 26% upside from its last close of $92.31.

Vistra's Stock Performance

Vistra Corp., a Texas-based power company, has seen a remarkable surge in its stock performance this year. Since joining the S&P 500 in May, Vistra's stock has soared 139%, adding $18.5 billion to its market cap, which now totals $32 billion, according to FactSet data. This makes Vistra the third-best performing stock in the index this year, trailing only Super Micro Computer and Nvidia. The company's success is largely attributed to the increasing demand for electricity driven by the AI boom, manufacturing reshoring, and the electrification of industry and vehicles.

Jim Burke, CEO of Vistra, highlighted the company's long-term strategy: "For seven years we’ve been growing our company with this electrification theme in mind." Burke also noted that joining the S&P 500 significantly boosted investor interest. "Folks are coming to Vistra and they are saying, ‘I need a large scale data center and I need power and I need it quickly,’" Burke said.

Nuclear Power and Competitive Edge

Vistra's competitive edge lies in its ability to dispatch power based on economics, unlike regulated utilities. Shahriar Pourreza, senior managing director of North American power and utilities at Guggenheim Securities, emphasized this point: "One of the best ways to profit from rising demand for electricity is to hold independent power producers like Vistra." The company also owns nuclear power plants, which are in high demand due to their carbon-free, reliable power. In March, Vistra completed a $3.4 billion acquisition of two nuclear plants in Ohio and one in Pennsylvania from Energy Harbor.

Vistra's energy mix includes 58% natural gas, 20% coal, 15% nuclear, 6% renewables, and 1% oil. Pourreza noted that Vistra could benefit from premium pricing and long-term contracts with data centers. "For the Vistras out there, what that means is, they’ll be selling power to a data center at above market rates," he said. Guggenheim has a buy rating on Vistra stock with a price target of $133, implying a 44% upside from Wednesday’s close of $92.31.

Wall Street's Bullish Outlook

Wall Street analysts are broadly bullish on Vistra, with 85% of the 13 analysts covering the company rating it as a buy, according to FactSet data. The average price target is $117 per share, or 26% above the last close. Although Vistra hasn't yet announced a deal with a data center operator, the tech sector's demand for nuclear power is evident. Amazon Web Services recently bought a data center powered by nuclear energy for $650 million and is in talks with Constellation Energy for more nuclear power.

Mark Nelson, founder of Radiant Energy Group, described the current market scenario: "The gold rush is on. The existing nuclear plants are the hottest thing in power right now." Constellation, the largest operator of nuclear plants in the U.S., has gained 87% this year, making it the fourth-best performing stock in the S&P 500 behind Vistra. Guggenheim has a buy rating on Constellation with a price target of $242, implying a 10% upside from Wednesday’s close of $219.55 per share.

Street Views

  • Jim Burke, CEO of Vistra (Bullish on Vistra):

    "For seven years we’ve been growing our company with this electrification theme in mind."

  • Shahriar Pourreza, Guggenheim Securities (Bullish on Vistra):

    "For the Vistras out there, what that means is, they’ll be selling power to a data center at above market rates, which is materially higher than the current curves. And not only will it then be selling power at above market rates, they’ll also be selling that power over a long term contract."
    "Vistra doesn’t need to sell debt or stock, is buying back stock, generating positive cash flow and has credit metrics that are basically in investment grade territory."

  • Mark Nelson, Radiant Energy Group (Bullish on nuclear plants for data centers):

    "The existing nuclear plants are the hottest thing in power right now. They’re going to be able to nearly name their price to build out to data centers that are parked right at their gate."

Management Quotes

  • Jim Burke, CEO of Vistra:

    "Folks are coming to Vistra and they are saying, ‘I need a large scale data center and I need power and I need it quickly.’ And because we’re a competitive company, we can move quickly. And so we’re having lots of conversations with all these biggest customers."