Morningstar

Vistra: Massive Meta Contracts Lock In Nuclear Profits, Growth

The contracts effectively eliminate Vistra’s regulatory and political uncertainty in the mid-Atlantic states.

The logo of Vistra Corp. is displayed on a smartphone screen.
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Securities in This Article
Vistra Corp
(VST)

Key Morningstar Metrics for Vistra

Vistra VST announced that it signed several 20-year retail energy supply contracts with Meta totaling 2.2 gigawatts, with additional financial support to add 433 megawatts of capacity at its three mid-Atlantic region nuclear plants.

Why it matters: This is the deal investors have been waiting for since the start of the data center energy demand excitement two years ago and Vistra’s acquisition of three mid-Atlantic nuclear plants in 2023.

  • Management expects the contracts to increase cash flow before growth by 8%-10% in 2027, or about $400 million. The uprates would add another 5%-7% by 2034, according to management, but will require significant capital investment during the next six years, offsetting some of that benefit for shareholders.
  • At full ramp, the Meta contracts and the Comanche Peak (Texas) contract announced in November eliminate Vistra’s wholesale market exposure for most of its nuclear fleet, representing about one-third of Vistra’s annual power generation.

The bottom line: We are raising our fair value estimate to $97 per share from $88 to reflect higher implied profit margins in the Meta contracts than our mid-cycle profit margin assumptions for Vistra’s mid-Atlantic fleet. We are reaffirming our no-moat rating for Vistra.

  • Vistra stock was up 11% on Friday (up 16% at open, then fell off the rest of the day) and is down 21% from its September high. We think the market valuation remains rich.

Big picture: The Meta contracts effectively eliminate Vistra’s regulatory and political uncertainty in the mid-Atlantic states related to rising capacity prices and customer bills.

  • This deal makes Vistra’s recent natural gas power plant acquisitions more valuable because of the low-cost hedge the gas plants provide for the Meta contracts.
  • We continue to assume $7.0 billion EBITDA in 2026, excluding the Cogentrix acquisition. This is in line with management’s $6.8 billion-$7.6 billion guidance range it initiated in November.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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