Jefferies removed its recommendation to buy Vistra shares after Vistra's stock rose to a record high

Investment bank Jefferies downgraded to neutral the rating of shares of American energy company Vistra after reaching a historic high. Vistra's securities have reached a fair price, while its chances to quickly conclude a profitable deal on energy supply for data centers have decreased, Jefferies believes.

Jefferies downgraded Vistra shares from "buy" to "hold" and adjusted the target price from $241 to $230 per share. The reason for this decision was the rapid growth of shares of the energy company. According to Jefferies, this rise "surpassed everything that any "bull" could predict a few years ago," writes Parameter.io. Shares of the energy company, which a day earlier had updated the price record, collapsed in trading on September 23 by 6.3% to $204.24. However, two years ago Vistra shares were traded at $30.

"Shares of [Vistra] are already up significantly and are pricing in a very optimistic scenario of data center contracts," Barron's quoted Jefferies as saying in a research note. "We believe [Vistra] shares are fairly valued at this stage, as the market is already pricing in significant upside potential from nuclear and gas-fired power contracts," the investment bank said.

The revision of the investment rating was also affected by the fact that Vistra has not yet reached an agreement with hyperscalers - operators of large, high-energy data centers - to supply power from its Comanche Peak nuclear power plant. "As the announcement of the deal is delayed beyond our most recent expectations (early September), it becomes less certain that Vistra will be able to conclude the deal in the near term and/or without additional conditions," stated Jefferies.

While Jefferies has taken a cautious stance, others remain optimistic. Scotiabank initiated analyst coverage on shares of Vistra on September 22 with an "outperform" rating and $256 target price. Goldman Sachs maintains a neutral rating but raised its target price from $179 to $203 in August. Morgan Stanley maintained an "above market" rating (Overweight) in the same month, but raised the target from $200 to $207. UBS in July maintained its Buy recommendation with a target price of $230 instead of the previous $207.

Of the 18 analysts tracked by FactSet, 15 recommend buying Vistra stock (Buy, Overweight or equivalent ratings). Two, including Jefferies, recommend Hold, and one analyst, Travis Miller of Morningstar Equity Research, has a Sell rating, Barron's reports.

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