Vistra (VST) shares have fallen out of favor with investors in recent weeks, but the options market believes they will recover meaningfully after the company reports earnings on Nov. 6. Consensus is for Vistra to report $2.89 in earnings per share (EPS) for its third financial quarter, which would represent about 65% growth on a year-over-year basis.
At the time of writing, Vistra stock is down about 30% versus the start of this year.
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www.barchart.comWhat Options Traders Expect From Vistra Stock
Options traders seem to believe the recent pullback in VST stock has created an attractive entry point ahead of earnings, with sentiment pointing to a rebound if the company delivers another strong quarter.
The put-to-call ratio for options expiring on Nov. 13 currently stands at 0.36x, reflecting a decidedly bullish tilt among derivatives traders. Generally, a reading below 1.00x suggests upside exposure is being favored over downside protection.
Barchart data shows the implied upper price target for those contracts at $129.58, indicating room for roughly 7.7% upside following the earnings release.
Adding to the bull case, Vistra now trades at about 14x forward earnings, a valuation that sits well below its historical norms, leaving scope for multiple expansion should fundamentals remain solid.
What Makes VST Shares an Attractive Long-Term Buy
Vistra shares are attractive ahead of earnings because of the company’s exposure to a relentless increase in U.S. electricity demand. As artificial intelligence data centers and industrial electrification projects consume more power, wholesale power prices have generally remained supported in key markets where VST operates.
The NYSE-listed firm also benefits from a diversified generation fleet that includes nuclear, natural gas, solar, and battery-storage assets, providing management with multiple avenues to capitalize on favorable market conditions.
Meanwhile, Vistra has continued to return capital through share repurchases, an investor-friendly strategy that can boost earnings per share over time.
All in all, if management delivers another strong quarter and reaffirms its outlook, investors may begin to focus less on recent share-price weakness and more on the company's long-term earnings growth potential.
How Wall Street Recommends Playing Vistra
Wall Street analysts remain largely bullish on VST shares heading into the quarterly print.
The consensus rating on Vistra sits at “Strong Buy,” with the mean price objective of roughly $198 signaling potential for a more than 60% rally from here.
www.barchart.com On the date of publication, Wajeeh Khan did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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