Vistra, Sempra and Exelon poised for solid earnings, Morgan Stanley says
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Three utility companies set to release Q2 earnings this week - Vistra (NYSE:VST), Sempra (NYSE:SRE) and Exelon (NASDAQ:EXC) - appear positioned for positive results, Morgan Stanley analysts said on Monday, according to UtilityDive.com.
Among independent power producers, Morgan Stanley said it perfers Vistra (VST) given the recent Texas heatwave, high energy prices and the company's unhedged generation capacity.
Vistra (VST) looks "well positioned to benefit from the heatwave underway in Texas, both from realization of potential upside in Q3 from power price spikes along with the opportunity to layer on additional hedges in future years at attractive prices to increase the EBITDA outlook," Morgan Stanley said.
The Texas heat also could help Sempra (SRE), which owns an 80% stake in the state's largest distribution utility, Oncor Electric, the bank said, seeing "the potential for a $0.10 beat" in Q2 earnings.
For Exelon (EXC), Morgan Stanley sees a "constructive" setup, expecting "a quiet quarter to resonate favorably in the current defensive posturing within the sector, continuing to prove out the company's ability to execute on earnings."
The utilities sector is richly valued, but Exelon (EXC) shares have upward momentum heading into this week's earnings report, Mike Zaccardi writes in a bullish analysis newly published on Seeking Alpha.