NRG Energy Inc. (NRG)

[eFinanceMarkets]

NRG Energy upgraded to Buy at UBS as GenOn settlement, PJM add clarity

NRG Energy (NRG +3.2%) pops more than 3% after UBS upgrades shares to Buy from Neutral and raises its price target to $20 from $19, saying the GenOn settlement and latest PJM auction add clarity while the cost cutting thesis remains intact and the major near-term catalyst for the stock.

While the deadline for the cost review is set for Aug. 14, UBS expects more details to come out sooner and could well see management update 2017 guidance in the coming weeks given the added clarity provided by the GenOn settlement.

The firm continues to assume $140M of cost cuts in its base case valuation and sees further savings potential within the retail and renewable segments.