Shifting Focus to Data Centers: Constellation Energy's Evolving Narrative

By Don Francis, Editor
May 15, 2024 7:02 AM UTC
Shifting Focus to Data Centers: Constellation Energy's Evolving Narrative

Mizuho's Anthony Crowdell raised their price target on Constellation Energy (NASDAQ: CEG) by 64.4% from $132 to $217 on 2024/05/10. The analyst maintained their Hold rating on the stock.

Constellation Energy, a company that distributes electric power, natural gas, and offers energy management services, recently reported its Q1 2024 earnings. Crowdell took a big-picture approach, noting that the "Constellation Energy narrative has evolved as the company has been able to shift focus from hydrogen to being a data center power supplier." This shift in focus could have significant implications for the company's future growth and profitability.

Despite the positive outlook, Constellation Energy's Q1 2024 earnings report had mixed results. The company reported an earnings per share (EPS) of $1.82, surpassing the Zacks Consensus Estimate of $1.64 and showing a remarkable increase of 133.3% compared to Q1 2023's $0.78. However, the company's revenue of $6.2B fell short of the Zacks Consensus Estimate of $8.4B by 26.7% and Q1 2023's $7.6B by 18.4%.

Constellation Energy also announced several important developments during the quarter. The company repurchased 3 million shares for $500 million and authorized an additional $1 billion under its existing repurchase program. Additionally, Moody's upgraded the company's credit rating from Baa2 to Baa1, reflecting confidence in Constellation Energy's financial performance.

Looking ahead, management provided guidance for FY 2024, projecting an EPS range of $7.23 to $8.03. President & CEO Joe Dominguez expressed optimism about the company's prospects, stating, "We had another strong quarter as support grows for nuclear energy as a reliable, clean source to meet growing demand from electric vehicles, heavy industry, and emerging technologies." CFO Dan Eggers highlighted the company's strong financial performance and the issuance of the nation's first-ever corporate green bond that includes nuclear.

Analysts' opinions on Constellation Energy are generally positive. According to the latest data, 71.4% of top-rated analysts currently 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 an EPS of $7.62, representing a modest 1.2% increase on a year-over-year basis.

Since the release of Constellation Energy's Q1 2024 earnings report, the stock price has increased by 0.8%. Year-over-year, the stock has shown remarkable growth, surging by 171.3%. During this period, Constellation Energy has outperformed the S&P 500, which has seen a more modest increase of 26.8%.

Mizuho analyst Anthony Crowdell, who raised the price target on Constellation Energy, is ranked in the top 14% of Wall Street analysts by WallStreetZen. With an average return of 6.8% and a 54% win rate, Crowdell specializes in the Utilities and Technology sectors.

Constellation Energy Corporation, which split off from parent company Exelo in 2022, is headquartered in Baltimore, MD. The company serves a diverse range of customers, including utilities, municipalities, commercial, industrial, government, and residential clients.

What are the top analysts predicting for Constellation Energy?

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