Morgan Stanley Adjusts NRG Energy PT to $159 From $162, Maintains Equalweight Rating

NRG Energy (NRG) fell 4.2% after Jefferies cut its price target to $131 from $160, while maintaining a Buy rating. The company declared a quarterly dividend of $0.475 per share. Recent guidance reaffirmation and higher interest expenses also influenced investor sentiment, alongside broader power-demand concerns.

FERC rejected most of PJM Interconnection's plan to manage data center demand, citing state jurisdiction concerns. PJM must revise its proposal, addressing why data centers would be prioritized for curtailment. FERC's decision may raise capacity prices, benefiting power producers like Constellation Energy, NRG Energy, Talen Energy, and Vistra, according to Jefferies.

NRG Energy (NYSE: NRG) shares rose 5.69% on strong earnings and guidance. The company reported $1.12B in quarterly operating cash flow and $30.7B in annual revenue, but faces regulatory delays from FERC on PJM's Reliability Backstop Procurement plan, impacting near-term cash flow. Analysts adjusted price targets, with Morgan Stanley at $159 and Scotiabank at $162, while the average target remains around $191–$194. NRG is also focusing on AI-driven demand growth.

PJM Interconnection, the largest US grid operator, suspended its emergency power auction for data centers after FERC criticized the plan. The auction aimed to address a 6.8GW power shortfall, with costs primarily borne by 67 million customers. FERC found the plan 'deeply flawed' and delayed it for five months. Goldman Sachs notes the suspension is 'net bearish' for independent power producers, with Talen (TLN) and Constellation (CEG) most exposed.

Shares of Constellation Energy (CEG), NRG Energy (NRG), and Talen Energy (TLN) fell after FERC delayed PJM's plan to secure more power for the U.S. grid, citing unresolved issues. CEG dropped 4.2%, NRG hit a 17-month low, and TLN declined 0.5%. TD Cowen noted the delay creates uncertainty for these companies, which have significant exposure to the PJM market.

Vistra (VST) and NRG (NRG) rose 0.9% and 1.6% respectively, while NuScale (SMR) fell 15.8% after UBS downgraded it, citing delays and financial risks. UBS questioned NuScale's commercialization timeline and customer commitments, leading to a broader nuclear sector selloff. Vistra and NRG benefited from their current earnings and diversified power strategies.