Energy, Utilities & Mining Pulse: Investors Asking: Where Do We See the Most Positive/Negative 2027 Consensus Revisions?

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Energy, Utilities & Mining Pulse: Investors Asking: Where Do We See the Most Positive/Negative 2027 Consensus Revisions?

Goldman Sachs Energy, Utilities & Mining Pulse

Utilities:

Among Buy-rated stocks in power/utilities, we see the most upside consensus risk to

Talen (TLN). Here, we see 7% upside to consensus EBITDA estimates for 2027. This is

driven by (1) recently completed M&A and execution on asset integration/performance,

and (2) upside to power prices in 2027 where the forward curve has recently started to

firm to the mid $60s/MWh range across nodes in PJM. We believe if power prices

continue to firm, or spark spreads otherwise expand, there could be further upside from

running marginal units more to capture the upside. More broadly, we see potential

catalysts for shares from improved regulatory clarity in PJM, where the RBP filing is

expected by the end of the month, as well as incremental large load PPA signings. We

also see valuation as attractive with shares trading at a 10% FCF yield on our 2027

numbers.

For a Neutral/Sell rated stock where we see downside to 2027 consensus estimates, we

would highlight Neutral rated CEG, where we are 2% below consensus EBITDA. We

believe this is driven by slightly softer Texas power prices vs. PJM, as well as higher fuel

costs and O&M expenses, which could be attributed to stronger synergy realizations

from the Calpine transaction being priced into consensus estimates. Our Neutral view on

CEG is predicated on less leverage to EBITDA upside from incremental PPAs and

valuation despite a strong fundamental business highly levered to nuclear power assets.

Midstream:

We highlight LB as the stock with the most significant upside to 2027 consensus

revisions, driven by strong produced water growth and commercial momentum. We