- NRG Energy (NRG -7.5%) is downgraded to Sell from Buy with a $16 price target at UBS, which says the stock's risk and reward "skews negatively" following the near doubling off January lows.
- "NRG and peers have rallied as part of a bullish gas thesis, but we think the market is overlooking the $285M decrease in PJM capacity revenue and the potential for continued weakness in PJM, which represents 33% of capacity,” UBS writes.
- Despite NRG’s strong performance YTD, 2019 ATC power prices are roughly flat in its core markets and the recent PJM capacity auction came in solidly below expectations, and UBS notes that PJM deterioration is particularly negative for NRG as it looks to negotiate with creditors of its GenOn subsidiary.