Constellation Energy Earns Buy Rating with $462 PT from Melius Research

Constellation Energy Earns Buy Rating with $462 PT from Melius Research

Constellation Energy Corporation (CEG) has received a significant boost from Melius Research, which has upgraded the stock to a "Buy" rating with a price target of $462. This positive outlook comes on the heels of several strategic moves and strong financial performance by the company.

CEG recently signed a 20-year Power Purchase Agreement (PPA) with Meta, covering the full output of the Clinton Clean Energy Center. This deal supports Meta’s clean energy goals and enables a 30-megawatt capacity expansion at the Clinton facility. Additionally, CEG is investing in Pennsylvania's nuclear sector with plans to restart operations at the Crane Clean Energy Center, extend the operations of the Peach Bottom Energy Center through 2054, and boost the capacity of the Limerick Clean Energy Center [1].

CEG’s financial performance has been robust, with an adjusted operating EPS of $1.91 for Q2 2025, surpassing analyst expectations. The company’s P/E ratio is currently at 35.06, indicating premium valuation levels compared to its Fair Value estimate. CEG has reaffirmed its 2025 adjusted operating EPS guidance range of $8.90-$9.60, with analysts leaning towards the higher end of this range. Looking ahead, CEG projects double-digit EPS growth through 2030, supported by its nuclear fleet operations and the increasing demand for clean energy [1].

Key growth drivers for CEG include the growing demand for clean, reliable energy sources, the rapid expansion of AI infrastructure and data centers, and the implementation of nuclear Production Tax Credits (PTCs). The company is also exploring opportunities for nuclear plant uprates and the development of Small Modular Reactors (SMRs) [1].

However, CEG faces several challenges, including a high debt burden, capital-intensive operations, regulatory risks, power price fluctuations, and increased competition in the clean energy sector. The company's high valuation metrics may also limit potential upside, potentially leading to increased volatility if growth expectations are not met [1].

Analysts have set varying targets for CEG, with Raymond James at $393, Wolfe Research at $350, BMO Capital Markets at $337, and Citi Research at $318 [1].

References:
[1] https://www.ainvest.com/news/constellation-energy-strikes-20-year-ppa-meta-boosts-nuclear-expansion-plans-2508/
[2] https://za.investing.com/news/swot-analysis/constellation-energys-swot-analysis-nuclear-giants-stock-powers-clean-energy-future-93CH-3839255