By Dhirendra Tripathi – NRG Energy (NYSE:NRG) was up more than 2.5% in Monday’s premarket trading on landing a ‘conviction buy’ call from Goldman Sachs (NYSE:GS).

While upgrading the stock from ‘buy’, the bank also raised the target price for the power company to $57, an upside of 48% from the stock’s closing on Friday.

The bank expects the company’s retail business and a return to more normal operating conditions after winter storm Uri to drive cash flows in 2022-23.

The retirement of multiple coal plants in Illinois and Delaware will have little impact on the company, according to Goldman Sachs analyst Michael Lapides.

The analyst also sees the power retailer going for share buyback of “just under 25% of its market cap given its strong leverage metrics and cash generation”.

“However, our numbers do not assume the cash inflow and lost EBITDA associated with the announced pending sale of 4.8 GW of fossil power plants,” Lapides said in a note.

NRG is selling 4.8 gigawatts of fossil-fueled power capacity in various regions, including plants in Middletown, Hartford and Milford plants in Connecticut for $760 million.

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