AES - AES downgraded at Wolfe on coal exit tax credit headwinds

2023-04-17 11:57:29 ET

AES Corp. ( NYSE: AES ) -2.8% in Monday's trading as Wolfe Research downgraded the stock to Peer Perform from Outperform with a $31 price target, citing a likely reset of growth expectations due to tax credit and coal exit headwinds after 2025.

Wolfe's Steve Fleishman said he sees two big headwinds to AES' ( AES ) anticipated 7%-9% compound annual growth rate guidance past 2025: lost earnings from the final coal exit, and less tax credit growth, as the company already has reached full run rate of investment tax credits by 2025.

As a result, Fleishman expects either a lower EPS growth rate or a one-year re-base, but he said he remains positive over the longer term on AES' ( AES ) renewables leadership and shift to the U.S.

AES Corp. ( AES ) was selected recently as one of five utility stocks seen as outperformers by Morgan Stanley analysts .

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