Firm expects free cash flow of approximately $1.0bn annually for the next 3-4 years, giving NRG flexibility to either 1) buyback roughly 30%-40% of its existing market capitalization or 2) reduce outstanding debt by almost 50%.
Firm's 12-month $49 Sum-of-the-Parts valuation assumes $/kW values for NRG's specific nuclear, coal and gas plants and long-term upside to their target price exists.
Notablecalls: NRG upped guidance in May and told investors they intended to restructure their senior credit agreement to relieve restrictive covenants from the restricted payments basket and increase flexibility for return of capital to shareholders. The stock is now down 10% from these levels.
I think the 50 day MA may come to play today (around $36) and represents a solid buying opportunity. GSCO isn't the only firm out there with a $50 target, representing hefty upside from current levels.