Positive Outlook for AES: Strong Operational Performance and Strategic Moves Justify Buy Rating

In a report released today, David Arcaro from Morgan Stanley maintained a Buy rating on AES (AES – Research Report), with a price target of $23.00.

David Arcaro has given his Buy rating due to a combination of factors that suggest a positive outlook for AES. Despite the company reporting earnings per share below consensus expectations, their adjusted EBITDA exceeded estimates, indicating strong operational performance. The management’s reaffirmation of financial targets for 2025 and 2027 further supports confidence in the company’s future growth prospects.
AES has successfully completed the sale of a minority stake in its insurance business, which not only meets their asset sales target for 2025 but also provides an attractive earnings yield. This transaction is seen as accretive and strategically beneficial, as it resembles financing through a junior subordinated note while receiving full equity treatment. Additionally, the renewable power purchase agreement bookings, although below expectations, still align with the company’s long-term goals. These strategic moves and financial stability underpin Arcaro’s Buy rating for AES.

In another report released on May 2, Evercore ISI also maintained a Buy rating on the stock with a $15.00 price target.