Artificial intelligence is reshaping America's electricity landscape, and Wall Street is taking notice. Mizuho has initiated coverage on Vistra Energy Corp. (VST) and Talen (TLN), assigning both stocks an "Outperform" rating with price targets of $169 and $405, respectively.
Mizuho analyst Anthony Crowdell views Vistra Energy Corp. as one of the largest and most strategically positioned commercial power platforms capable of capitalizing on the structural surge in U.S. electricity demand driven by artificial intelligence and data center expansion. Crowdell highlights that Vistra continues to expand its generation portfolio, most recently adding 5.5 gigawatts through the acquisition of Cogentrix, spanning the ERCOT, PJM, and ISO-New England markets.
Looking ahead, the analyst projects Vistra's free cash flow yield will climb from approximately 8% in 2025 to roughly 13% by 2028. This trajectory reflects the company's precise market positioning to benefit from upward movements in the back end of forward power price curves, accelerating its cash return potential. Given an expected five-year compound annual growth rate of 10% in adjusted free cash flow, Crowdell believes Vistra's current valuation presents a highly attractive entry point.
Turning to Talen, Crowdell's positive outlook stems from the company's differentiated footprint within the increasingly constrained PJM power market. With 98% of Talen's generation assets located in PJM, the company is well-positioned to benefit from widening supply-demand gaps. This tightening dynamic has driven the latest capacity auction prices from $29 per megawatt-day in 2024-25 to the current cap level of approximately $330 per megawatt-day. Crowdell forecasts Talen's adjusted free cash flow yield will reach 14% by 2028.
The analyst also notes that Talen's Susquehanna nuclear plant provides scarce generation resources, with contracted cash flows secured through a power purchase agreement with Amazon. Additionally, the Cornerstone acquisition completed this June added three natural gas plants to Talen's PJM portfolio, increasing installed capacity by 2.6 gigawatts.
As of Monday's market close, Vistra Energy Corp. shares slipped 0.4% to $135.66, down nearly 16% year-to-date. Talen shares declined 2.84% to $305.535, falling more than 18% so far this year.