Talen Energy (TLN) shares are expected to trade higher after an upsized power purchase agreement with Amazon.com's (AMZN) Amazon Web Services and a potential data center agreement at Montour, Oppenheimer said in a note Friday.
The upsized deal between Talen's Susquehanna facility and AWS is anticipated to add roughly $73 per share of value, while a potential deal for the Montour power plant could be signed at $70 to $75 per megawatt hour, analysts Ian Zaffino and Isaac Sellhausen wrote.
"Overall, we remain positive on market fundamentals and the company's strategy to expand its data center offering at Susquehanna, Montour, and ultimately at LMB and Martins Creek," the analysts said.
A "disciplined" M&A strategy is expected to allow Talen Energy to expand its data center exposure beyond its current portfolio, the analysts added.
Oppenheimer raised Talen Energy's price target to $315 from $250, and maintained an outperform rating on the stock.
Shares of the company were up almost 1% in recent Friday premarket activity.
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