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KeyBanc Analyst Raises Constellation Energy's Price Target by 21.1%

By Don Francis, Editor
May 21, 2024 6:22 AM UTC
KeyBanc Analyst Raises Constellation Energy's Price Target by 21.1%

KeyBanc's Sangita Jain raised their price target on Constellation Energy (NASDAQ: CEG) by 21.1% from $190 to $230 on 2024/05/20. The analyst maintained their Strong Buy rating on the stock.

Jain said their price target move on Constellation Energy was catalyzed because the company is actively investigating various alternatives to meet growing energy demand. These alternatives include the addition of 1 GW of capacity through upgrades to its current fleet, restarting closed-down plants, and a recent proposal to partner with companies to support the build-out of small modular reactors and other nascent technologies. Jain also highlighted that Constellation Energy is mitigating much of the risk through long-term Power Purchase Agreements (PPAs).

In the first quarter of 2024, Constellation Energy reported earnings per share (EPS) of $1.82, beating the Zacks Consensus Estimate of $1.64 by 10.9% and Q1 2023's EPS of $0.78 by a staggering 133.3%. However, the company's revenue of $6.2 billion missed the Zacks Consensus Estimate of $8.4 billion by 26.7% and Q1 2023's revenue of $7.6 billion by 18.4%.

Despite the revenue miss, Constellation Energy repurchased 3 million shares for $500 million during the quarter and authorized an additional $1 billion under the existing repurchase program. The company's credit rating was upgraded by Moody's from Baa2 to Baa1, indicating improved financial performance and stability.

Looking ahead, Constellation Energy's management guided for EPS of $7.23 to $8.03 for the full year 2024. President & CEO Joe Dominguez expressed confidence in the company's prospects, stating that support for nuclear energy is growing as a reliable and clean source to meet the increasing demand from electric vehicles, heavy industry, and emerging technologies.

CFO Dan Eggers emphasized the strong performance of Constellation Energy's generation fleet, supportive energy policies, and the issuance of the nation's first-ever corporate green bond that includes nuclear energy. The company's credit rating upgrade and the expansion of the share repurchase authorization by $1 billion further reinforce confidence in Constellation's outlook.

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 forecast among analysts is that CEG's upcoming year will deliver EPS of $7.62, representing a 1.2% increase on a year-over-year basis.

Since Constellation Energy's latest quarterly report on May 9, 2024, the stock price has declined by 0.4%. However, on a year-over-year basis, the stock is up by an impressive 157.5%, outpacing the S&P 500's 26.6% growth during the same period.

Sangita Jain, the KeyBanc analyst who raised Constellation Energy's price target, is ranked in the top 19% out of 4,587 Wall Street analysts by WallStreetZen. Jain specializes in the Industrials, Utilities, and Technology sectors and has an average return of 19.8% with a win rate of 85%.

Constellation Energy Corporation, a company that distributes electric power, natural gas, and offers energy management services, serves utilities, municipalities, commercial, industrial, government, and residential customers. Established in 2022 after splitting off from parent Exelo, the company is headquartered in Baltimore, MD.

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