Jefferies has trimmed its price target for NRG Energy (NYSE: NRG) to $181.00 from $198.00 while sustaining a Buy rating on the shares. The brokerage made the adjustment after moderating its forward assumptions for power markets, though it continues to view the company favorably on several metrics.
According to market data cited by Jefferies, NRG is trading around $149.93, implying upside to the revised target. Analysts' consensus sentiment remains on the bullish side with a consensus recommendation of 1.8 on an institutional scale where 1 equals Strong Buy.
In a research note published Tuesday, Jefferies said the revision reflected lower expected Texas power prices and reduced long-term capacity assumptions in PJM. Those market inputs prompted the firm to temper its earnings and cash-flow outlook for merchant generation, producing the lower target.
Despite the downgrade to the target, Jefferies described NRG as "the best positioned merchant to deliver additionality" and called out an attractive free cash flow yield of roughly 14% as a compelling feature of the investment case. The note also flagged near-term project and corporate catalysts that support its constructive view.
Among those catalysts, Jefferies expects a major combined-cycle gas turbine project in excess of 1 gigawatt with a hyperscaler partner to be finalized in the first half of 2026. The firm also anticipates a comprehensive refresh of fourth-quarter results that could provide updated forward guidance and portfolio detail.
Separately, Jefferies highlighted that the company's transformative agreement with LS Power is moving toward completion after receiving approval from the U.S. Department of Justice. The deal, as described by the firm, would add approximately $1.8 billion of EBITDA by bringing in 13 gigawatts of gas-fired generation capacity and an associated demand response platform.
NRG confirmed that it has obtained final antitrust clearance from the Department of Justice for its planned acquisition of 18 natural gas generation facilities and a commercial and industrial virtual power plant platform from LS Power. That clearance follows earlier approvals from the Federal Energy Regulatory Commission and the New York State Public Service Commission, and clears the path for the transaction to close shortly.
On capital allocation, NRG announced an 8% increase in its quarterly dividend to $0.475 per share. The company said the raise aligns with its stated target of 7-9% annual dividend growth. The dividend is scheduled to be paid on February 17, 2026, to shareholders of record as of February 2, 2026.
Management transitions are also on the calendar. Robert J. Gaudette has been named the next chief executive officer, effective April 30, 2026, and will assume the role of President immediately. Current CEO Lawrence Coben will remain in his position until the 2026 annual shareholder meeting in connection with the planned succession. In addition, Kevin T. Howell has resigned from the board of directors to pursue another opportunity; the company stated that his departure was not the result of any disagreement with the company.
Overall, Jefferies' modification to NRG's target reflects a more cautious merchant price outlook while maintaining conviction in the company's ability to generate significant free cash flow and to expand scale through the LS Power transaction and new project development.