Shares of NRG Energy Inc. NRG shot up 6.0% in afternoon trading Monday, enough to pace the S&P 500’s SPX advancers after BofA Securities turned bullish on the fossil and nuclear fuel production company, citing valuation in the wake of the closing of the Vivint Smart Home Inc. acquisition and improvement in retail fundamentals. BofA analysts Julien Dumoulin-Smith and Paul Zimbardo raised their rating on NRG to buy from neutral, and lifted the stock price target to $39 from $35. After the $5.2 billion Vivint deal closed on March 10, the stock closed at a 2 1/2-year low on March 15. BofA analysts said while they didn’t view the Vivint deal as the optimal use of the company’s capital, “there are opportunities to create incremental value via stronger cost control and cross-selling to NRG retail brands that are less price sensitive.” They also believe investors have overlooked the earnings power of NRG’s nuclear plus Texas-centric retail business.” The stock has dropped 12.0% over the past 12 months, while the Utilities Select Sector SPDR exchange-traded fund XLU has lost 5.5% and the S&P 500 has declined 11.6%.
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