Raymond James Initiates Coverage of Talen Energy Corporation (TLN) Stock, Gives Outperform

Talen Energy Corporation (NASDAQ:TLN) is one of the Top Energy and Utility Stocks Wall Street Analysts Are Talking About. On June 13, Raymond James analyst J.R. Weston began coverage of the company’s stock with an “Outperform” rating and a price objective of $314. The analyst believes that the upcoming 2025-2026 auction might clear at the $325/MW-day cap, which can act as a near-term catalyst. With the current market momentum favoring acquirers, mainly with Talen Energy Corporation (NASDAQ:TLN)’s story and equity value fueled by the AWS deal, the company’s M&A potential has been adding to the upside, according to Raymond James.

As per the terms of a new power purchase agreement, Talen Energy Corporation (NASDAQ:TLN) plans to supply electricity to Amazon for operations supporting AI and other cloud technologies at Amazon’s data center campus adjacent to Susquehanna, with the capability to deliver to other sites across Pennsylvania. Under the expanded PPA, at the full contract quantity, Talen Energy Corporation (NASDAQ:TLN) will offer Amazon 1,920 megawatts of carbon-free nuclear power through 2042, with options to further extend the duration. The power delivery schedule is expected to ramp over time, projecting to achieve full volume no later than 2032.

Prosper Stars & Stripes, a long/short equity fund, recently released its Q1 2025 investor letter. Here is what the fund said:

“Talen Energy Corporation (NASDAQ:TLN) was the top contributor in the long book during the first quarter of 2025. Talen is an independent power producer (“IPP”) with 10.7 gigawatts (“GW”) of power producing assets in the 13 state mid-Atlantic region of the U.S. called the Pennsylvania-New Jersey-Maryland (“PJM”) market. As mentioned in previous letters, the company’s crown jewel asset is the 2.2 GW Susquehanna nuclear power plant. Talen signed a long-term power purchase agreement (“PPA”) with Amazon Web Services (“AWS”) for a total of 960 megawatts (“MW”). The first phase for up to 300 MW of power is in place; however, the additional phases are under review by the Federal Energy Regulatory Commission (“FERC”). Given the demand for clean energy and artificial intelligence (“AI”) datacenters, we believe a positive resolution is likely, as the dispute centers on interconnect costs and grid reliability. There are only 3.6 GW of new gas-fired generation projects expected to come online by 2030 in the PJM market. Based on management’s demand forecasts, this is not enough capacity to meet the expected needs of the market. Talen reached an agreement to extend the lives of its reliability-must-run (“RMR”) assets Brandon Shores and H.A. Wagner to the end of the decade rather than ceasing operations in May 2025. These assets will receive fixed payments totaling $180 million annually for the life of the contract. RMR assets are designed to ensure there are fewer or no blackouts when the grid is stressed. We believe the scarcity value of Talen’s assets, financial stewardship of its balance sheet and cash flows, and equity valuation support our price target of approximately $300 per share.”

While we acknowledge the potential of TLN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than TLN and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.