On Thursday, Jefferies initiated coverage on Constellation Energy (NASDAQ:CEG) with a Hold rating and set a price target of $183.00. The firm indicated that the current valuation of Constellation Energy shares reflects a balance compared to the higher prices observed in the May-July period.
Constellation Energy, recognized as the largest nuclear owner in the United States with a fleet capacity exceeding 22 gigawatts, is well-positioned for potential data center contracts.
The stock has seen a significant increase, surging over 50% year-to-date and more than 300% since its spin-off from Exelon Corporation (NASDAQ:EXC). This robust performance has been attributed to the unique opportunities presented by the company's capacity to secure data center contracts, which have been a key driver behind the stock's momentum.
Despite the positive trend, Jefferies points out that the true potential of the upside from data center contracts remains uncertain at this stage. The analyst's commentary suggests that while the company's prospects are promising, the exact impact of these opportunities on Constellation Energy's financial performance is not fully clear.
The Hold rating by Jefferies suggests that the firm sees the current stock price as reflecting the relatively high expectations of the market. Given the uncertainty surrounding the extent of the benefits from data center deals, the analyst believes the shares are fairly valued for the time being.
In other recent news, Constellation Energy Corporation announced robust second-quarter financial results, with GAAP earnings of $2.58 per share and adjusted operating earnings of $1.68 per share. The company also increased its full-year adjusted operating earnings guidance to a range of $7.60 to $8.40 per share.
Constellation has completed $1 billion in share repurchases year-to-date, indicating a positive outlook on its value creation capabilities. Barclays (LON:BARC) initiated coverage on Constellation Energy with an Overweight rating and set a price target of $211.00, citing the company's unique market position and potential for future growth.
Additionally, the company's recent agreement with Amazon (NASDAQ:AMZN) Web Services was noted as a critical development for Constellation Energy's positioning in the data center power supply market. CEO Joe Dominguez emphasized the company's focus on colocation with data centers, currently under review by the Federal Energy Regulatory Commission.
Furthermore, Constellation Energy's capacity auction results exceeded expectations, leading to increased earnings projections for 2025 and 2026. The company has allocated over $2.3 billion of capital for 2024 and 2025, indicating a strong financial footing for the upcoming years.
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