An Outperform initiation on Talen Energy, with 28.4% upside to a $478 price target as AI-driven power demand strengthens its data centre power business.
Purpose
Whether Talen Energy was undervalued given the accelerating demand for reliable power from AI data centres and its growing exposure to the sector.
Findings
- 01AI-driven data centre demand is creating power supply gaps, strengthening the case for on-site generation.
- 02Talen's $18B, 17-year AWS PPA provides long-term contracted cash flows from its nuclear capacity.
- 03Normalising a $501M non-cash charge produces $6.17 adjusted EPS for FY2025.
- 04Blended valuation supports a $478 price target, implying 28.4% upside.