Vistra Is Under $150. Here's Why I Think It Won't Stay That Way.
Key Points
Vistra's stock surged in recent years on rising energy demand from AI data centers, but has since dropped.
It boasts a diverse fleet of power generation assets across key transmission regions like PJM and ERCOT.
It has locked in a long-term agreement with Meta Platforms and announced an acquisition to increases capacity.
- 10 stocks we like better than Vistra ›
Vistra's (NYSE: VST) stock has surged in recent years as energy demand has exploded, powered by artificial intelligence (AI) data centers. However, shares of the power generation company have cooled down this year amid concerns about pushback on behind-the-meter deals with hyperscalers, and it's now down 32% from its peak. Here's why I don't think Vistra shares will stay under $150 for long.
Vistra's earnings are inflecting higher amid major deals
Vistra operates as an independent power producer, meaning it sells its energy capacity into the wholesale power markets or through long-term agreements.
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Earlier this year, Vistra signed a major 20-year Power Purchase Agreement (PPA) with Meta Platforms to supply 2,609 megawatts (MW) of carbon-free nuclear energy and to uprate capacity at its nuclear sites in the PJM region. It also locked in a similar agreement with Amazon Web Services.
In the second quarter, Vistra's adjusted EBITDA was $1.7 billion, growing 31% year over year. Management reaffirmed its adjusted EBITDA guidance of $6.8 billion to $7.6 billion and projects 2027's figure to be between $7.4 billion and $7.8 billion.
Image source: Getty Images.
Vistra could see even more upside. Earlier this year, it announced plans to acquire Cogentrix, which owns 10 natural gas generation facilities with about 5,500 megawatts of capacity. Between the Cogentrix deal and the Meta Platforms PPA, the company expects to add roughly $700 million in incremental adjusted EBITDA in 2027, a significant tailwind that is not yet fully reflected in its current guidance.
Is Vistra stock a buy right now?
Vistra stock has been volatile this year and is down 32% from its 52-week high, as investors weigh potential regulatory headwinds alongside the sustainability of the ongoing data center build-out.
That said, Vistra has done a solid job securing long-term agreements, and analysts project strong growth ahead, including earnings per share of $8.97 for 2026 and annual increases of 20% in 2027 and another 17% in 2028.
With Vistra stock trading at around 16.6 times this year's projected earnings, I think now is an excellent time for investors to scoop up the energy stock.
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Courtney Carlsen has positions in Meta Platforms and Vistra. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Vistra. The Motley Fool has a disclosure policy.
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