Dimple Gosai, an analyst from Bank of America Securities, reiterated the Hold rating on AES (AES – Research Report). The associated price target was raised to $14.00.
Dimple Gosai’s rating is based on a combination of factors that reflect AES’s current financial and operational position. The company has shown tangible progress in areas such as financing improvements, disciplined capital allocation, and flexibility in coal retirements, which are positive steps forward. However, 2025 is seen as a transition year, and despite recent asset sales alleviating some credit pressure, there are limited levers left for significant upside in the near term.
Additionally, while the $450 million monetization of a stake in its captive insurer AGIC helps de-risk AES’s 2025 asset sale target, execution on the renewables ramp remains critical. The company’s leverage metrics are close to the threshold needed to maintain its investment-grade rating, and mixed first-quarter results, along with reliance on a second-half renewables EBITDA ramp, suggest that the potential for immediate stock re-rating is limited. Consequently, the Hold rating reflects a cautious stance given these uncertainties and challenges.