Constellation Energy Surpasses Q1 Expectations, Receives Credit Rating Upgrade

By Don Francis, Editor
May 15, 2024 7:01 AM UTC
Constellation Energy Surpasses Q1 Expectations, Receives Credit Rating Upgrade

BMO Capital's James Thalacker raised their price target on Constellation Energy (NASDAQ: CEG) by 23.5% from $200 to $247 on 2024/05/13. The analyst maintained their Buy rating on the stock.

Constellation Energy, a leading distributor of electric power, natural gas, and energy management services, recently reported its Q1 2024 earnings. Thalacker, focusing on management's guidance, noted that it was not updated despite a strong start to the year and strong forward commodity curves. The analyst expects that management will address these positive drivers concurrent with any earnings guidance revisions in the second half of the year.

In Q1 2024, Constellation Energy performed well, beating expectations on several key metrics. The company reported earnings per share (EPS) of $1.82, surpassing the Zacks Consensus Estimate of $1.64 and showing an impressive year-over-year increase of 133.3% compared to Q1 2023's $0.78. However, revenue fell short of expectations, coming in at $6.2 billion, missing the Zacks Consensus Estimate of $8.4 billion by 26.7% and Q1 2023's $7.6 billion by 18.4%.

Constellation Energy also announced positive developments during the quarter, including the repurchase of 3 million shares for $500 million and the authorization of an additional $1 billion under the existing repurchase program. Moreover, the company's credit rating was upgraded by Moody's from Baa2 to Baa1, reflecting improved financial performance and stability.

Looking ahead, Constellation Energy's management provided guidance for FY 2024, expecting EPS in the range of $7.23 to $8.03. President and CEO Joe Dominguez emphasized the company's strong performance and its role in meeting growing demand for clean energy from various sectors, including electric vehicles, heavy industry, and emerging technologies. CFO Dan Eggers highlighted higher output from the company's generation fleet, supportive energy policies, and strong performance in the commercial business as factors contributing to their strong Q1 earnings.

Currently, 71.4% of top-rated analysts rate CEG as a Strong Buy or Buy, while 28.6% see it as a Hold. No analysts recommend or strongly recommend selling the stock. The consensus among analysts is that CEG's upcoming year will deliver an EPS of $7.62, representing a 1.2% increase on a year-over-year basis.

Since the release of Constellation Energy's latest quarterly report, the stock price has increased by 0.8%. Year-over-year, the stock has seen a remarkable surge of 171.3%, outpacing the S&P 500, which has risen by 26.8% during the same period.

BMO Capital analyst James Thalacker, who raised the price target on CEG, is ranked in the top 11% of Wall Street analysts by WallStreetZen. With an average return of 8.1% and a win rate of 54.8%, Thalacker specializes in the Utilities sector.

Constellation Energy Corporation, which split off from parent Exelo in 2022, serves a wide range of customers, including utilities, municipalities, commercial, industrial, government, and residential sectors. Headquartered in Baltimore, MD, the company is actively involved in the distribution of electric power, natural gas, and energy management services.

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