NRG Energy
will be making its case to investors next week while activist investor Elliott Management nips at the energy company’s heels.
It has been an eventful month for Houston-based NRG (ticker: NRG), with Elliott reinitiating an activist stake in the company after NRG announced in December that it would buy Vivint Smart Home. NRG shares fell 15% when the deal was announced. The Vivint acquisition closed in March but NRG stock still hasn’t fully recovered, even though it sports a year-to-date gain of about 8%.
Since Elliott’s stake became known, NRG has named a new chief financial officer and announced the sale of its 44% stake in the South Texas Project Electric Generating Station, a nuclear plant, for $1.75 billion. NRG also announced that it would hold an investor day on June 22.
It’s a showcase opportunity that NRG won’t want to waste.
“In our extensive investor conversations, it is apparent to us that NRG management has lost the support of a large share of the investor base,” BofA Securities analyst Julien Dumoulin-Smith wrote in a note earlier this month. He rates NRG stock at Buy with a $42 price target.
NRG declined to comment ahead of the meeting, but said last month that it “welcomes all shareholders’ input and looks forward to an open dialogue with Elliott.”
Dumoulin-Smith sees NRG announcing some $100 million to $200 million in cost cuts next week.
But with Elliott seeking board seats and more savings, it’s unlikely that NRG’s coming presentation will appease the activist firm.
Write to Carleton English at [email protected]
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