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On Thursday, BMO Capital analysts raised the price target for Constellation Energy stock (NASDAQ: NASDAQ:CEG) to $350 from $337, maintaining an Outperform rating. Trading at $299.54, the stock has surged 34% year-to-date and currently appears overvalued according to InvestingPro analysis. This adjustment follows Constellation’s recent announcement of a 20-year virtual power purchase agreement (PPA) with Meta Platforms (NASDAQ:META).
The agreement involves purchasing the entire carbon-free output from Constellation’s Clinton Nuclear facility, which is expected to generate approximately 1.12 gigawatts post-uprate, starting in June 2027. The specific financial details of the transaction were not disclosed. With a market capitalization of $93.9 billion and a P/E ratio of 30.7, Constellation maintains a "GOOD" overall financial health score based on InvestingPro’s comprehensive analysis framework.
BMO Capital analysts estimate an initial base case assumption of $80 per megawatt-hour, with an annual escalation of about 3.0% to account for operations, maintenance, and capital expenditure inflation. This assumption compares to their previous production tax credit floor pricing expectation for 2027 and beyond.
The analysts noted that the new price target reflects an average annualized accretion of approximately 5.0% to earnings per share, EBITDA, and adjusted free cash flow before growth.
In other recent news, Constellation Energy has been active with several significant developments. The company reported first-quarter 2025 earnings per share (EPS) of $2.14, aligning with market expectations, as highlighted by BMO Capital Markets, which subsequently raised its price target for Constellation Energy to $337. UBS also increased its price target to $360 following a 20-year power purchase agreement (PPA) with Meta Platforms for the Clinton nuclear plant, which is expected to add significant value to the company. Furthermore, Wolfe Research lifted its price target to $350, maintaining an Outperform rating, citing Constellation Energy’s growth potential and strategic capital deployment.
However, Citi downgraded Constellation Energy from Buy to Neutral, despite raising the price target to $318, due to the recent rally in the company’s stock price. The agreement with Meta not only secures the Clinton facility’s operation but also expands its output and supports Meta’s clean energy goals. Constellation Energy is contemplating future developments at the site, including potential construction of advanced nuclear reactors. These recent activities highlight Constellation Energy’s strategic focus on long-term clean energy agreements and potential growth through acquisitions like Calpine.
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