Vistra's (VST) current valuation does not fully reflect the strength of its core business, which remains well-positioned to grow regardless of data center deals, BofA Securities said in a note Tuesday.

The analysts noted that Vistra's core business in baseload power generation and competitive retail energy services is set to benefit from tightening markets in PJM Interconnection and the Electric Reliability Council of Texas, as well as increasing demand and retail growth.

While the stock has underperformed recently due to a lack of data center news, the analysts believe upcoming regulatory clarity from the Federal Energy Regulatory Commission and the Texas legislature could help advance data center deals.

BofA sees regulatory clarity as the main hurdle to data center deals and expects developments in the coming months. The analysts also believe that demand for data centers remains strong as large technology companies, known as hyperscalers, increase spending in the sector.

Although the firm does not factor data center deals into the company's valuation, it believes it could provide additional upside.

The analysts updated their earnings before interest, taxes, depreciation, and amortization estimates for 2025, 2026, and 2027 to $5.72 billion, $6.55 billion, and $6.67 billion, respectively, from $5.47 billion, $6.35 billion, and $6.48 billion.

BofA upgraded Vistra to buy from neutral and adjusted its price objective to $152 from $164.

Price: 119.63, Change: -4.33, Percent Change: -3.49