Investors often look deep into calls when outsized upside is projected. That’s particularly true when they get new “street-high” target prices from bulge bracket firms on Wall Street. Now add in that you are talking about some of the (already) best-performing stocks of 2024. JPMorgan has issued a new report telling clients to buy the electric power producers who will benefit from the explosive growth in electricity demand coming from the top AI data centers.
While JPMorgan is calling this a ‘paradigm shift’ in electricity demand, investors should keep in mind that the call is after many other analysts have talked up the same trends for some time in 2024. And the year-to-date gains have been more than impressive as you will see below. As for the impetus for this new coverage, let’s consider three very fresh nuclear power deals.
Oggonomics always reminds investors and its readers that no single analyst report should ever be the sole basis to buy or sell a stock. That decision to buy or sell, or hold or short sell, is up to each investor and the decision should be made with a financial advisor. All of the investment ratings and price targets listed are from JPMorgan and consensus price targets are from FinViz.
THE BIG TARGETED CALLS
Vistra Corp. (NYSE: VST) was given a new Overweight rating with a $178 price target as JPMorgan initiated coverage. This call is handily above consensus target prices at closer to $145 per FinViz data. While this may not be the absolute “Street-High” call from analysts everywhere, it is the highest price target of the major U.S. brokerage and investment banks.
Constellation Energy Corporation (NYSE: CEG) was started with an Overweight rating and it was assigned a $342 price target at JPMorgan. Microsoft recently signed a pact with Constellation Energy via one of the Three Mile Island reactors that was not damaged and it will be for up to 800MW of power. The reactor should be back in operations in 2028. Constellation’s consensus analyst target price was shown to be about $288 by FinViz.
Talen Energy Corporation (NASAQ: TLN) was also part of the call. JPMorgan initiated coverage with an Overweight rating and assigned a $268 price target. Talen was last seen trading at $178.00 after the call. Its shares are up nearly 180% YTD. Talen Energy now has a deal with Amazon.com for $650 million to put up a site right next to one of Talen’s power plants so that it gets direct power without having to connect to the grid that the rest of the companies and people have to rely upon.
If JPMorgan is right that implies another 30% upside for Vistra and over 20% more upside for Constellation. Just keep in mind that both stocks have surged since September and YTD gains are massive — with a 140% gain for Constellation and an even more impressive 250% YTD gain for Vistra.
Google’s parent Alphabet Inc. (NASDAQ: GOOGL) just recently signed up for 500 MW of power from small modular reactors by privately-held Kairos. That first operational unit is slated for 2030 and the rest by 2035.
MORE FRINGE BENEFICIARIES
Another positive was called for ABB of Switzerland. Its shares are no longer NYSE-listed ADSs but the company remains a key industrial player in infrastructure. JPMorgan talked up ABB’s growth in electrification after the growth seen in utilities and data centers. JPMorgan also talked up some of its solar related stocks and power backup as well.
Generac Holdings Inc. (NYSE: GNRC) is generally considered a backup power player for homes from storms and weather causing power outages, but it has an extensive commercial operation that also feeds into power-producer needs as well. JPMorgan maintained its Neutral rating on Generac but the firm did still raise its price target to $178 from $160. Generac was last seen trading near $172.00. Its 52-week trading range is $79.86 to $175.86 and the consensus analyst price target was shown as $162.79 by FinViz.
Array Technologies, Inc. (NASDAQ: ARRY), which makes sells ground-mounting tracking systems used in solar energy projects, was reiterated as Overweight in the call, but the firm did trim its price target down to $20 from $22 in the call. Array shares closed at $6.87 ahead of this analyst call and its market cap is barely $1 billion.
Shoals Technologies Group, Inc. (NASDAQ: SHLS) is another solar player that was reiterated as Outperform, but with a slight price target cut to $12 from $14, by JPMorgan. Shoals was last seen trading at $5.10.
Nextracker, Inc. (NASDAQ: NXT) provides integrated solar tracking and software solutions for solar power-producing plants. JPMorgan maintained its Overweight rating while trimming its price target to $58 from $62 in that call. Nextracker was last seen trading at $34.00.
