J.P

J.P. Morgan Reports NRG Energy Spending On Two New Reactors

In a report published by J.P. Morgan, NRG Energy (NYSE: NRG) has been spending some of its significant FCF on building two new reactors at its South Texas Project nuclear plant.

J.P. Morgan said that the company's announcement today that it is suspending activity on the new reactors pending better regulatory visibility for new U.S. nuclear following the Japanese earthquake should help alleviate some investor fears, though recent relative stock performance implies much already priced in. We continue to recommend buying the stock. “We estimate that NRG shares offer investors a ~20% FCF yield which we expect the company to redeploy to create shareholder value. We believe a delay in NRG's nuclear development plans likely reduces the likelihood that the company will redeploy its cash into what we believe is one of the higher0risk outlets for its capital. We continue to recommend buying the stock.”

NRG Energy closed yesterday at $20.86.