Mizuho initiates Talen Energy stock coverage with outperform rating

Mizuho initiated coverage on Talen Energy Corp., setting an outperform rating and a price target of $405.00 per share. The firm highlighted the company's significant exposure to PJM power markets, where 98% of Talen Energy's generation facilities are located. Recent capacity auctions saw prices increase to about $330 per megawatt-day, compared to $29 per megawatt-day in 2024/25.

Talen Energy's Susquehanna nuclear plant generates revenue through a power purchase agreement with Amazon. The company experienced a 76% revenue growth over the past year, driven by the acquisition of Cornerstone, which added 2.6 gigawatts of gas capacity in PJM. Mizuho projects adjusted free cash flow yield to reach 14% by 2028, with a sum-of-the-parts valuation applying 13 times EV/EBITDA for nuclear assets and 7.5 times for fossil assets.

The $405 price target suggests a 28% upside potential from share buybacks, potential deals with hyperscale data center operators, and the company's strategic position in the market. Talen Energy's stock is currently trading near its 52-week low of $301.45.