AES - AES downgraded at BofA as cautious data points keep stacking up

2023-06-22 14:20:35 ET

AES Corp. ( NYSE: AES ) drops as much as 5% in Thursday's trading before paring losses, now -1.4% , after Bank of America downgraded the stock to Neutral from Buy with a $23 price target, saying a series of events following the company's Analyst Day is "too much to bear."

BofA analyst Julien Dumoulin-Smith pointed to the head of the company's U.S. renewables business recent departure during a critical ramp in development; the acquisition of a 2 GW backlog from a peer developer leading to questions on the 61 GW pipeline; and Duke Energy's sale of renewables at 9x EBITDA, which "crystallizes asset valuations below sector expectations."

Even after a recent chat with AES ( AES ) CEO Andrews Gluski, Dumoulin-Smith said he remains concerned over the focus on equity issuance over monetizing remaining fossil/thermal portfolio and/or a growing renewables portfolio; "without a seeming near-term need for equity today, upsizing sales over equity would appear a more appealing value creator,"  the analyst said.

More on AES Corp.:

• Financial and valuation comparison to sector peers
• Analysis: AES Corp.: A Hold Until The Balance Sheet Improved
• Stock price return: Down 25.5% YTD, down 1% in the past 12 months

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