) to buy from neutral.
Analyst Steven Fleishman says since the fourth quarter report, the 15% discount on TXU's stock has widened to 22%, while at the same time he's seen key improvements in the fundamental outlook. He notes recently a approved price-to-beat increase in Texas should improve TXU's profitability in baseload coal and nuclear generation.
Fleishman says the global energy services firm's credit is now less of a concern given the recent upsized debt issuance completed at TXU Energy. He notes strong projected free-cash flow, this year's IRS tax refund, and securitization proceeds should leave the company with around $3 billion for a debt paydown. He has a $19 target.