NEW YORK (TheStreet) -- Shares of Calpine Corp. (CPN) are up 5.02% to $21.13 after Deutsche Bank upgraded the the Houston-based independent wholesale power producer to "buy" from "hold" and raised its price target to $31 from $25.
"We think CPN's presence in the East, Texas and West provides geographic diversity and its exclusive reliance on natural gas as an input fuel cost, suggests that if natural gas falls further and pulls down power prices with it, CPN would be a relative winner in that environment, justifying its peer group 0.5x multiple premium," Deutsche Bank analysts said.
Calpine also possesses a "hidden gem" in its Geysers, a 725 MW renewable energy asset in California, they said.
Deutsche Bank expects that the company will continue to maintain a "disciplined investment focus" as recently highlighted by placing a hold on a potential Texas expansion.
Furthermore, analysts foresee that the company will use its substantial cash flow generation to buy back shares, supporting substantial free cash flow and share growth.
Separately, TheStreet Ratings team rates CALPINE CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CALPINE CORP (CPN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, increase in stock price during the past year, compelling growth in net income and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."