Monday, Credit Suisse upgraded RRI Energy, Inc. (RRI) shares to Outperform from Neutral with a price target of $6.
Analyst Eggers is keeping his gas price forecasts, but as E&P analyst Jon Wolff has noted, gas inventories are now at 'normal' versus wildly oversupplied in December, which in his mind helps to mitigate risk of a disastrous downside case in RRI shares.
The analyst said that at $5.01, RRI is nearing its lowest levels since the Retail sale in May in absolute terms and versus the XLU, XLE (more commodity exposed), and S&P. RRI offers the best leverage to recovering in gas prices or power demand. When married with our still more cautious stance on the group, the analyst likes having upside leverage at a good entry point.
The analyst noted that RRI's dynamic hedging strategy better matches power and fuel hedges which helps solidify near-term liquidity/solvency while leaving the future open to market recovery. The analyst's price target of $6 comes from his sum-of-the-parts approach, but equally notable are straight multiple valuations at 8.9x / 6.8x vs 8.9x / 7.7x 2010/2012 EBITDA with free cash flow yields of 7% / 16% vs -1% / 13%.
RRI's quarterly Open EBITDA guidance update will likely point down modestly due to lower gas / power prices and higher spot coal. The analyst thinks minor moves on this point are less troubling in the current market. The analyst also worry about the market's current de-risking but find comfort in the entry point. The analyst still thinks 2010 is a year to be nimble and take advantage of entry points, which he sees as attractive in RRI January 25.
Currently, RRI is up $0.1250 or 2.50% and trading at $5.14.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.