Bank of America has made significant upgrades to its ratings for Vistra (NYSE: VST) and AES Corp (NYSE: AES). They upgraded Vistra from “Neutral” to “Buy” and AES from “Underperform” to “Neutral” based on the companies’ improved capital discipline and strategic growth focuses.

Key Takeaways

Vistra (NYSE: VST) – Upgraded to “Buy”
Vistra has seen a favorable valuation after recent underperformance. The company is well-positioned to benefit from strengthening power markets and rising energy demand. It has reduced capital expenditures by $1.3 billion, concentrating on investments that promise higher returns. A $300 million cost-cutting initiative enhances Vistra’s ability to meet its growth objectives. Despite a reduction in its price target from $164 to $152, Vistra still presents a total return potential of 23%.

AES Corp (NYSE: AES) – Upgraded to “Neutral”
AES’s decision to cut capital spending and implement more realistic growth targets for its renewable energy segment improves its execution prospects. The price target has been adjusted upward to $13 from $11, indicating a more stable outlook, although the company faces risks related to asset sales and funding constraints.

Investor Outlook: What’s Next?

Vistra’s disciplined allocation of capital enhances its long-term growth potential. Conversely, AES’s strategic changes help mitigate risks, although it will need to manage funding challenges effectively. Both companies could see favorable outcomes from a tightening power market.

Bottom Line: Vistra’s strategic focus on cost-cutting and disciplined growth makes it a compelling buy. At the same time, AES’s adjustments signal positive long-term execution potential.