Talen Energy (TLN) is "well positioned" to benefit from "strong" power fundamentals through its long term nuclear contract with Amazon's (AMZN) Amazon Web Services and its mix of gas and coal assets in the Pennsylvania-New Jersey-Maryland Interconnection, UBS said in a Friday note.
UBS analysts said that a rising demand for power, along with higher wholesale power prices and potential upside growth from future gas contracts supports pushing Talen Energy's valuation higher, UBS said.
The analysts also said that Talen's AWS deal enhances its balance sheet quality and allows the company to pursue additional generation assets, thus, increasing their potential to sign long-term power contracts.
UBS raised its 2026 adjusted EBITDA estimates to $1.47 billion from $1.38 billion and boosted its 2027 adjusted EBITDA forecast to $1.64 billion from $1.34 billion.
The investment bank maintained a buy rating on Talen Energy and raised its price target to $366 from $296.
Price: 291.49, Change: +0.11, Percent Change: +0.04
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