Key Takeaways
- Morgan Stanley initiated Overweight coverage on Constellation Energy (CEG) with a $385 price target, suggesting approximately 30.6% upside potential from Tuesday’s $294.85 closing price.
- Shares climbed 4.2% to $307.04 on Wednesday, despite trading down 16.5% year-to-date and falling 10.6% since geopolitical tensions with Iran escalated.
- The Wall Street firm identified the current valuation as an “attractive entry point,” estimating data center contracting opportunities alone contribute $70 per share in potential value.
- The company operates America’s largest nuclear power fleet at approximately 22 gigawatts, with established long-duration agreements serving Meta and Microsoft data centers.
- Analysts project Q1 earnings will increase 17% to $2.51 per share, while full-year revenue is expected to climb 17% to $29.88 billion.
Constellation Energy (CEG) shares finished Tuesday’s session at $294.85, then surged 4.2% to reach $307.04 during Wednesday trading.
Constellation Energy Corporation, CEG
On Wednesday, Morgan Stanley initiated coverage on Constellation Energy (CEG) with an Overweight recommendation and established a $385 price objective. This target price indicates potential appreciation of roughly 30.6% from the previous day’s close.
The upgrade arrives during a challenging period for shareholders. CEG has declined 16.5% since the start of the year, with a 10.6% retreat following the outbreak of conflict involving Iran. However, the research team headed by David Arcaro views this weakness as a buying opportunity.
“We estimate CEG is priced at a level that values the existing assets ($255/share on our math) with modest value for incremental growth and value upside opportunities,” the note said.
Morgan Stanley’s $385 price objective incorporates multiple value drivers: $70 per share attributed to data center partnerships, $40 from anticipated power price appreciation, and $22 from clean energy credit programs. These components represent substantial value for a stock currently trading in the low $300s.
Nuclear Power’s Strategic Advantage
Constellation commands the nation’s most extensive nuclear generation portfolio, delivering approximately 22 gigawatts of output capacity. Morgan Stanley emphasized several competitive advantages: continuous 24/7 carbon-free power generation, extended operational lifespans, available land with established grid connections suitable for data center development, and opportunities for deploying small modular reactor technology on existing sites.
The artificial intelligence-fueled nuclear investment theme isn’t breaking news for CEG investors. Shares appreciated 91% throughout 2024 and climbed an additional 58% in 2025 before encountering headwinds this year.
The company has already secured two significant multi-decade power purchase agreements. A 20-year arrangement with Microsoft was finalized in 2024 to deliver nuclear-generated electricity for the tech giant’s data infrastructure. Subsequently, in June 2025, Constellation announced another 20-year commitment with Meta — providing more than 1,100 megawatts from its Clinton Clean Energy Center facility in Illinois.
Morgan Stanley anticipates “further data center contracting opportunities this year.”
Upcoming Catalysts
Constellation plans to unveil its 2026 financial projections and strategic roadmap on March 31. The company declined to issue forward guidance during its February Q4 earnings announcement, making the forthcoming update particularly significant for investors.
Morgan Stanley identified the March 31 presentation as the “next catalyst for a potential contract announcement.”
Regarding financial performance, Wall Street consensus calls for first-quarter earnings per share to advance 17% to $2.51, accompanied by 30% revenue growth to $8.84 billion. Full-year projections anticipate earnings of $11.69 per share and revenue reaching $29.88 billion — representing year-over-year increases of 24.5% and 17%, respectively.
The aggregated analyst outlook from InvestingPro indicates 38% potential appreciation, modestly exceeding Morgan Stanley’s 30.6% projection.
During Q4, Constellation delivered adjusted earnings of $2.30 per share, marginally below the $2.31 Street estimate, while revenue of $6.07 billion substantially exceeded the $4.95 billion consensus forecast.
The company has also recently finalized an agreement to divest approximately 4.4 gigawatts of natural gas generation facilities within the PJM interconnection to LS Power Equity Advisors for $5 billion — a transaction mandated as part of regulatory requirements following its Calpine acquisition.
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