Key metric context: TTM P/E of 51.2x reflects mark-to-market derivative volatility that depresses reported earnings below economic reality. The forward P/E of ~28x is more representative. Adj. EBITDA guidance of $6.8–7.6B for 2026 represents 22–29% growth from 2025 — significantly above the P/E multiple implied growth rate. FCF conversion is guided at 60%+ of EBITDA starting 2026, implying $3.9–4.7B Adj. FCF, well above the TTM $1.79B.
THESIS: HIGH CONVICTION ENTRY TIMING: CONDITIONAL
Expected Value: (0.35 x 37%) + (0.40 x 18%) + (0.25 x -20%) = +15.2% over 180 days. R:R ratio: 1.8:1 at current price (base case $205 upside vs $140 stop-loss downside).
8 Consecutive Up Days: Rallied ~10% from ~$155 low (lowest since May). Trading at highest level in over one month.
80-Day MA Crossover: Per Schaeffer's Research, this signal has preceded an 8.3% one-month gain 78% of the time over the last three years. Projects ~$188 by mid-March.
Above 50-Day SMA ($162.90): Currently 6.6% above, confirming short-term uptrend.
Options IV at 21st Percentile: Implied volatility is the cheapest in a year. Market is underpricing potential moves around the Feb 26 earnings catalyst.
$180 Resistance Wall: Has capped every rally attempt since November — three months of rejection at this level.
200-Day SMA at $180.15: Still 3.6% below this major institutional trigger. The $180–$183 zone is a kill zone where rallies have repeatedly failed.
Extended Short-Term: 8-day winning streaks typically invite mean reversion. A 3–5% pullback to $165–168 is healthy and probable before earnings.
Earnings 9 Days Away: Buying into a multi-day rally just before a binary event carries momentum-trap risk if numbers disappoint. Last Q missed revenue by 19%.
Key level to watch: A confirmed close above $183 on elevated volume (>8M shares) would signal a genuine trend change and breakout from the 3-month downtrend channel. Until that happens, the stock is in a rally within a downtrend — a very different positioning calculus.
Vistra signed 20-year PPAs for 2,609 MW of zero-carbon nuclear energy with Meta across three plants: Perry and Davis-Besse in Ohio, and Beaver Valley in Pennsylvania. This includes 2,176 MW of existing capacity plus 433 MW of uprates — the largest nuclear uprates backed by a corporate customer in US history.
Revenue begins late 2026, scaling to full output by 2034. These contracts provide multi-decade earnings visibility that transforms VST from a merchant power producer into a quasi-contracted utility with growth optionality. Subsequent license renewals extend plant operations into the 2050s–2060s.
What the market hasn't fully priced: The 433 MW of uprates adds new capacity at marginal cost — the highest-margin megawatts in existence. Meta's Prometheus supercluster in Ohio signals additional demand. And the deal template is now proven for other hyperscalers (Amazon, Google) actively seeking similar arrangements.
Goldman Sachs (Feb 6): Upgraded to Buy from Neutral, PT $205. Cited Meta PPA as evidence of VST's ability to secure large-scale contracts. Noted pullback creates compelling entry vs. rising estimates.
Jefferies (Feb 10): Upgraded to Buy from Hold, PT $203. Cited improved risk/reward after 25% decline from September. Believes current price "fails to account for future data center opportunities" and Cogentrix acquisition economics.
Consensus: 18 Buy / 2 Hold / 1 Sell. Median PT $234. High PT $293 (Scotiabank). BMO PT $244. 90%+ bullish.
Trump-Japan Trade Deal (Feb 17): $550B Japanese investment commitment includes "largest gas power plant in history" in Ohio (PJM market), LNG facility in Texas, and critical minerals in Georgia. Explicit validation that power generation infrastructure is a national policy priority.
IRA Nuclear PTCs: Preserved under the One Big Beautiful Bill Act. Provides EBITDA floor for nuclear fleet. Strict domestic-sourcing rules disadvantage new entrants, making existing domestic fleets more valuable.
Bipartisan Nuclear Support: Ohio Republican and Pennsylvania Democratic officials praised the Meta-Vistra deal. Nuclear power has rare bipartisan backing as both energy security and clean energy infrastructure.
44 GW diversified fleet (nuclear + gas + solar + battery) is physically irreplicable. 6.5 GW nuclear fleet now anchored by 20-year Meta PPAs. Comanche Peak 1,200 MW PPA adds another long-duration anchor. Cogentrix adds 5.5 GW of modern gas plants. 5M retail customers provide a natural hedge. No new nuclear capacity before 2030 at earliest. Integrated generation-plus-retail model cannot be replicated without decades of capital and regulatory approval.
Feb 26: Q4/FY25 earnings — first full report post-Meta PPA, 2026 guidance update. Mar 17: FOMC rate path. ~Apr: PJM capacity auction outcomes. ~May: Q1 2026 actuals. Mid-2026: Cogentrix close (+5.5 GW). Late 2026: Meta PPA revenue begins. Ongoing: Additional hyperscaler PPAs probable. Multiple new-information events across the window, not just confirmation.
PJM capacity auctions hitting FERC-approved caps (~$333/MW-day) signal severe scarcity. The US needs ~122 GW by 2030 vs ~82 GW today. Permitting for new generation takes 5–7 years — a physics constraint, not a financial one. Trump administration announcing the "largest gas power plant in history" in Ohio confirms demand acceleration beyond existing models. VST owns ~24% of PJM capacity. The supply constraint is geological and regulatory — not solvable in 180 days.
This is the weakest factor. "Nuclear power for AI" is now broadly consensus — 18 Buy ratings, extensive media coverage, 600%+ stock appreciation since 2021. The remaining edge lives in: (1) Cogentrix integration economics not yet modeled in sell-side estimates, (2) future PPA announcements not priced, (3) PJM emergency auction proposal may actually benefit contracted generators. The peer valuation gap (CEG at ~14x EBITDA vs VST at ~10x) is the primary alpha source.
Trump administration explicitly pro-energy buildout. IRA nuclear PTCs preserved. Bipartisan support for nuclear expansion. Rate cut trajectory favors capital-intensive generators. $550B Japan investment commitment further validates energy infrastructure as national priority. Only headwind: PJM price cap rhetoric, which remains non-binding and may be net positive for contracted generators like VST.
Triggers: Q4 earnings beat + raised 2026 guidance to $7.5B+ EBITDA midpoint. Cogentrix closes smoothly, adds $800M+ incremental EBITDA. Second major hyperscaler PPA announced (Amazon or Google). PJM emergency auction resolves favorably. Rate cut materializes. Stock re-rates to 12–13x EBITDA, converging toward CEG's multiple.
Valuation support: At $235, VST trades ~11.5x 2026 EBITDA ($7.2B mid) — still below CEG at ~14x. Aligns with consensus analyst target of $234. Scotiabank's $293 becomes the stretch anchor.
Triggers: Solid Q4 earnings in-line with expectations. 2026 guidance maintained at $6.8–7.6B. Cogentrix on track. No additional PPA catalysts but no negative surprises. PJM regulatory noise persists without binding policy. Stock reclaims 200-day MA and consolidates. Goldman ($205) and Jefferies ($203) targets achieved.
Valuation support: At $205, VST trades ~10.8x 2026 EBITDA — fair for a contracted power generator with 22–29% EBITDA growth and 60%+ FCF conversion.
Triggers: PJM emergency auction implemented with binding price caps that compress capacity revenues. Major nuclear plant outage (Comanche Peak or Ohio fleet). AI capex cycle slows — hyperscalers reduce datacenter buildout. Broader market correction. Q4 earnings miss + guidance cut. Cogentrix integration delays.
Valuation floor: At $135, VST trades ~7x 2026 EBITDA — approaching levels where PE/activist interest emerges. $1B+ annual buyback creates natural demand support. Nuclear PTCs provide EBITDA floor. Strong support at $145 absorption base, then $130.
| Risk | Severity | Prob. | Mitigation |
|---|---|---|---|
| PJM regulatory intervention — Binding capacity auction price caps compress merchant margins | HIGH | 20-25% | Meta PPAs insulate nuclear fleet. Cogentrix gas plants in ERCOT (outside PJM). 96% hedged for 2026. "BYOG" mandate creates more PPA demand, not less. |
| Nuclear plant outage — Unscheduled outage at any of 6 nuclear units | HIGH | 10-15% | Fleet diversified across 6 units + 27 GW gas. Insurance programs. NRC track record strong. Inherent to all nuclear operators — not VST-specific. |
| $180 resistance failure — Rally fails, reverts to $160s range | MED | 40-50% | Wait for confirmed breakout or pullback before initiating/adding. Three months of rejection at this level demand respect. |
| Feb 26 earnings disappointment — Revenue miss, guidance soft | MED | 25-30% | Last Q missed revenue 19% on MTM derivatives (non-cash). If EBITDA guidance maintained, any earnings dip becomes a buying opportunity at better prices. |
| AI capex cycle slowdown — Hyperscalers reduce datacenter buildout | MED | 15-20% | Meta PPAs are 20-year contracts independent of AI spend. PJM scarcity persists regardless. Industrial reshoring + EV charging add non-AI demand layers. |
| Broader market correction — Recession, rate scare, geopolitical shock | MED | 20% | VST defensive relative to tech — contracted revenue, essential service, inflation hedge. Counter-cyclical demand profile. |
| Metric | Value |
|---|---|
| Market Cap | $58.85B |
| Net Debt (pro forma) | ~$15B |
| Enterprise Value | ~$73.8B |
| 2025 Adj. EBITDA (guide mid) | $5.8B |
| 2026 Adj. EBITDA (guide mid) | $7.2B |
| 2027 EBITDA (opportunity mid) | $7.6B |
| EV/2026E EBITDA | 10.2x |
| EV/2027E EBITDA | 9.7x |
| Adj. FCF (2026E at 60%) | $3.9–4.7B |
| Implied FCF Yield | 6.6–8.0% |
| Hedged Generation '26 | ~96% |
| Hedged Generation '27 | ~70% |
| Company | EV/EBITDA | EBITDA Gr. | Gap to VST |
|---|---|---|---|
| CEG | ~14x | 15-20% | +37% prem. |
| VST | 10.2x | 22-29% | — |
| NRG | ~10x | 15-18% | ~par |
| TLN | ~7x | 12-15% | -31% disc. |
VST trades at a meaningful discount to CEG despite comparable nuclear fleet, faster EBITDA growth, and Meta PPA visibility. Re-rating to 12x EBITDA implies ~$215. Parity with CEG at 14x implies ~$260.
Note on TTM FCF vs. Adj. FCF: The TTM firm FCF of $1.79B (3.0% yield) understates the forward picture. Management guides to 60%+ Adj. EBITDA-to-FCF conversion starting 2026, implying $3.9–4.7B — more than doubling the trailing figure. This conversion improvement reflects reduced hedging costs, nuclear PTC recognition, and Cogentrix integration synergies.
| Date | Event | Impact | Significance |
|---|---|---|---|
| Feb 17 | CEG Q4 Earnings (BMO) | MED | Sector read-through. Nuclear/PPA economics validation for VST thesis. |
| Feb 18 | ADI Earnings | LOW | DC power management revenue = infrastructure demand signal. |
| Feb 26 | VST Q4/FY25 Earnings | CRITICAL | First post-Meta PPA report. 2026 guidance update. Cogentrix timeline. Buyback pace. Potential guidance raise to $7.4B+ midpoint. |
| Mar 17–18 | FOMC Meeting | MED | Dot plot update. Rate cuts favor capital-intensive power generators. |
| ~Apr | PJM Capacity Auction | HIGH | Tests whether emergency auction rhetoric becomes binding policy. Clearing prices set sector direction for H2 2026. |
| ~May | VST Q1 2026 Earnings | HIGH | First quarter with 2026 actuals. Cogentrix integration progress. |
| Mid-2026 | Cogentrix Close | HIGH | +5.5 GW gas generation. Incremental EBITDA contribution begins. Total fleet to ~49.5 GW. |
| Late 2026 | Meta PPA Revenue Starts | HIGH | First contracted nuclear revenue flows. Thesis validation milestone. |
| Ongoing | Additional Hyperscaler PPAs | MED | Amazon, Google, Microsoft actively seeking nuclear power. Each new PPA is a step-function re-rating catalyst. |
| Ongoing | $1B+ Annual Buyback | LOW | Steady bid. 3–5% of float repurchased annually. Accelerates EPS growth, creates price floor. |
The stock has rallied 10% in 8 consecutive sessions. Buying into extended momentum 9 days before earnings is a well-documented momentum trap. Two disciplined entry paths:
Trigger: Confirmed daily close above $183 (200-day SMA) on volume >8M shares.
Entry zone: $183–$188
Stop: $170 (-7% from entry)
Target: $215–235 (+15% to +28%)
Most likely catalyst: Feb 26 earnings beat gaps above resistance.
Trigger: Pullback to $162–168 (50-day SMA zone).
Entry zone: $162–$168
Stop: $148 (-9% to -11%)
Target: $205–235 (+22% to +40%)
Most likely catalyst: Pre-earnings consolidation or $180 rejection.
Post-earnings contingency: If stock drops to $150–155 on an earnings disappointment, this becomes a high-conviction entry with 2.5:1+ R:R. Last quarter's "miss" was mark-to-market derivative accounting, not an operational issue. If the same dynamic recurs, the dip is a buying opportunity.
The 180-day thesis rests on three pillars: (1) the Meta PPAs transformed VST's earnings profile from merchant volatility to contracted visibility, and the market hasn't fully re-priced for it; (2) the catalyst calendar is front-loaded and dense — earnings Feb 26, FOMC March, PJM auction in April, Cogentrix close mid-year; and (3) the supply-demand imbalance in US power markets is structural and worsening, with 40 GW of new capacity needed for AI datacenters alone by 2030.
The risk is that the 10% rally in 8 days has compressed near-term R:R. The $180 resistance level has rejected rallies for three months. Earnings are 9 days away. Discipline requires waiting for either a confirmed breakout above the 200-day MA or a pullback to the 50-day MA — not chasing momentum into a binary event.
The expected value of +15.2% over 180 days with 1.8:1 R:R is attractive for a name with this level of earnings visibility and downside protection. The question isn't whether VST moves higher over 6 months — the fundamental setup strongly favors it. The question is whether patience at the entry delivers a better starting price.