Jefferies raises NRG Energy stock price target on data center growth By Investing.com

Investing.com - Jefferies raised its price target on NRG Energy stock (NYSE:NRG) to $199 from $181 while maintaining a Buy rating on the independent power producer.

The firm expects NRG to announce a major new 1GW+ combined cycle gas turbine project with a hyperscaler in the first half of 2026. Jefferies estimates the company offers a 13% free cash flow yield as an entry point, excluding future data center projects or $11 billion of buybacks allocated through 2030. An InvestingPro tip confirms that management has been aggressively buying back shares, supporting the firm's capital allocation thesis.

The analyst projects 5.4GWs of data center upside, with $1 billion in EBITDA upside by 2030 and $2.5 billion by 2033 -- significant growth from the company's current EBITDA of $2.97 billion. NRG has secured GEV turbine slots for 5.4GWs of new generation and maintains a strong EPC relationship with Kiewit. The stock has delivered a 76% return over the past year, though InvestingPro analysis suggests shares are currently trading above Fair Value. For deeper insights, investors can access NRG's comprehensive Pro Research Report, one of 1,400+ available for US equities.

NRG's approximately 1GW PJM gas uprates at around $1,000/kW represents another driver of growth. Jefferies expects NRG to make announcements with two approximately 1.2GW natural gas project final investment decisions in 2026, though the timing might come after the CEO transition later this month.

The firm projects new gigawatts are added at an EV/EBITDA multiple around 5.4x, which it describes as a highly accretive investment proposition.

In other recent news, NRG Energy has been making headlines with a series of significant developments. Wolfe Research upgraded NRG Energy's stock rating to "Outperform," highlighting the company's robust cash flow from its retail and generation business in Texas. This move follows NRG's strategic acquisitions of LS Power and Rockland Capital assets, which are expected to enhance its position in the power generation sector. Similarly, Goldman Sachs reinstated its coverage of NRG Energy with a "Buy" rating, citing the acquisition of LS Power assets as a transformative step that has doubled the company's generation capacity and diversified its energy portfolio.

Furthermore, NRG Energy announced a secondary offering of 14.3 million shares priced at $164 each by affiliates of LS Power. This sale is expected to generate approximately $2.35 billion in gross proceeds for the selling stockholders, though NRG will not benefit financially from this transaction. The shares were part of the consideration given to LS Power affiliates following the acquisition of LS Power portfolio entities. Additionally, NRG Energy launched another underwritten public offering of 12.3 million shares, with an option for underwriters to purchase an additional 1.845 million shares. These recent activities underscore NRG Energy's ongoing efforts to optimize its business operations and expand its market presence.

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