Constellation Energy's Long-Term Earnings Expected to Benefit from Favorable Power Prices, Says Wells Fargo Analyst

Wells Fargo's Neil Kalton raised their price target on Constellation Energy (NASDAQ: CEG) by 5.7% from $175 to $185 on 2024/03/19. The analyst maintained their Strong Buy rating on the stock.

According to the analyst, Constellation Energy's long-term earnings can be "modestly enhanced" due to power prices being above the production tax credit (PTC) level and the company's unique hedging strategies enabled by the PTC. This positive outlook is expected to drive a compound annual growth rate (CAGR) of 14% between 2025 and 2030, based on the company's 2024 guidance midpoint and the assumption that free cash flow will be used for share buybacks.

In addition to the rating change for Constellation Energy, Wells Fargo's Neil Kalton also made adjustments to other stocks in their portfolio. The price target on Nuscale Power Corp was lowered by -40% from $7.5 to $4.5, and the stock was downgraded from Hold to Strong Sell. On the other hand, the price target on Public Service Enterprise Group Inc was raised by 2.9% from $68 to $70, while maintaining a Strong Buy rating. Nrg Energy Inc also saw a price target increase of 20% from $65 to $78, with the Strong Buy rating being maintained.

Analysts' opinions on Constellation Energy are largely positive, with 75% of top-rated analysts currently rating the stock as a Strong Buy or Buy. 25% of analysts consider it a Hold, while no analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Constellation Energy will deliver earnings per share (EPS) of $5.82 in the upcoming year. If these predictions hold true, the company's next yearly EPS will see a 15.9% increase on a year-over-year basis.

CEG's stock price has shown significant growth since its last quarterly report on 2023/12/31, with a 47.5% increase. On a year-over-year basis, the stock is up by an impressive 123.9%. During this period, Constellation Energy has outperformed the S&P 500, which has posted a 31% increase.

Neil Kalton, the Wells Fargo analyst responsible for the rating change, is ranked in the top 19% of Wall Street analysts by WallStreetZen. With an average return of 3.1% and a 51.4% win rate, Kalton specializes in the Real Estate, Utilities, and Industrials sectors.

Constellation Energy Corporation, a company that distributes electric power, natural gas, and offers energy management services, has been the focus of this analyst rating. Serving utilities, municipalities, commercial, industrial, government, and residential customers, the company was founded in 2022 after splitting off from its parent company, Exelo. Constellation Energy is headquartered in Baltimore, MD.

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