Pennsylvania governor pushes for restart of Three Mile Island; Constellation (CEG.US) extends gains

Pennsylvania Governor Josh Shapiro reportedly sent a letter to the grid operator PJM Interconnection, asking for the Three Mile Island reactor to "go into service as soon as possible, not on the back burner like a new development project." The news boosted Constellation Energy (CEG.US) on Monday, sending its shares as high as $271.85. The company announced on Friday that it had reached a 20-year power supply agreement with Microsoft (MSFT.US), which will receive electricity from the reopened Three Mile Island nuclear plant in Pennsylvania. Shares of Constellation jumped 23% on the news, the biggest percentage gain ever, to close at a record $254.98. Shapiro said that since 2021, PJM had stopped accepting new power generation projects, and that it was not expected to reopen until 2026, and even then, it was unlikely to approve new projects for several years. Morgan Stanley analyst David Arcaro raised his price target on Constellation to $313 from $233 and reiterated an "Overweight" rating, saying the company's 20-year contract with Microsoft "proves the value of nuclear power to hyperscale companies, and future deals could be even more lucrative." Neil Kalton of Wells Fargo raised his price target on Constellation to $300 from $250 and maintained an "Overweight" rating, saying the company "is uniquely positioned to take advantage of the long-term trend toward decarbonization." He believes nuclear power will be an important part of the future generation mix in the U.S., as the country aims to achieve net-zero carbon emissions by 2050. Anthony Crowdell of Mizuho Securities raised his price target on Constellation to $255 from $189 and maintained a "Neutral" rating. Crowdell said that while he believed that the price Microsoft paid to Constellation was higher than what other nuclear suppliers received from buyers, the benefits were already reflected in the stock price.