Key Highlights
- Morgan Stanley reinstated Constellation Energy (CEG) coverage with an Overweight rating and $385 price target, suggesting approximately 30.6% potential upside from Tuesday’s $294.85 close.
- Shares climbed 4.2% to $307.04 on Wednesday, despite posting a 16.5% year-to-date decline that includes a 10.6% slide following escalating Iran tensions.
- Analysts characterized the current valuation as an “attractive entry point,” estimating data center contracting opportunities alone contribute $70 per share in value.
- The company controls America’s largest nuclear power fleet with approximately 22 gigawatts of capacity and maintains existing agreements with Meta and Microsoft for long-term power supply.
- Analysts anticipate CEG’s first-quarter earnings will jump 17% to $2.51 per share, while annual revenue projections point to a 17% increase reaching $29.88 billion.
Constellation Energy (CEG) shares finished Tuesday’s session at $294.85 and subsequently advanced 4.2% to reach $307.04 during Wednesday trading.
Constellation Energy Corporation, CEG
Morgan Stanley reinitiated coverage on Constellation Energy (CEG) Wednesday with an Overweight designation and established a $385 price objective. This target indicates roughly 30.6% potential appreciation from the previous session’s closing level.
The analyst recommendation arrives during a challenging period for shareholders. The stock has declined 16.5% since the year began, with 10.6% of that loss occurring after conflict with Iran intensified. David Arcaro and his analyst colleagues view the recent weakness as a buying opportunity.
“We estimate CEG is priced at a level that values the existing assets ($255/share on our math) with modest value for incremental growth and value upside opportunities,” the research note stated.
Morgan Stanley’s $385 projection dissects value across multiple catalysts: $70 per share attributed to data center contract potential, $40 from anticipated power price increases, and $22 stemming from clean energy credit opportunities. These components combine substantially for equity trading in the $290 range.
Nuclear Power Advantage
Constellation manages the nation’s most extensive nuclear generation portfolio, delivering approximately 22 gigawatts of total capacity. Morgan Stanley emphasized the fleet’s round-the-clock clean baseload generation, extended operational lifespans, data center-ready land and grid connections, and possibilities for deploying small modular reactor technology as significant value drivers.
The artificial intelligence-fueled nuclear investment thesis isn’t unfamiliar territory for CEG shareholders. The stock delivered 91% returns throughout 2024 and added 58% gains in 2025 before experiencing this year’s pullback.
Constellation has already secured two significant long-duration power agreements. The company finalized a 20-year arrangement with Microsoft in 2024 to deliver nuclear-generated electricity for its data center operations. Subsequently, in June 2025, it executed another 20-year contract with Meta — committing over 1,100 megawatts from its Clinton Clean Energy Center located in Illinois.
Morgan Stanley indicated expectations for “further data center contracting opportunities this year.”
Upcoming Catalysts
Constellation plans to unveil its 2026 financial projections and strategic roadmap on March 31. Management declined to issue forward guidance during February’s Q4 earnings release, elevating anticipation for the forthcoming announcement.
Morgan Stanley identified the March 31 presentation as the “next catalyst for a potential contract announcement.”
Regarding earnings expectations, Wall Street consensus projects first-quarter earnings per share will expand 17% to $2.51, accompanied by revenue growth of 30% to $8.84 billion. Full-year forecasts call for profits of $11.69 per share and revenue totaling $29.88 billion — representing advances of 24.5% and 17%, respectively, compared to 2025 results.
Broader analyst sentiment, according to InvestingPro data, identifies 38% potential upside, marginally exceeding Morgan Stanley’s 30.6% projection.
During the fourth quarter, Constellation delivered adjusted earnings of $2.30 per share, slightly missing the $2.31 consensus estimate, while revenue of $6.07 billion substantially exceeded the $4.95 billion projection.
The company additionally finalized an agreement to divest approximately 4.4 gigawatts of natural gas generation facilities in the PJM territory to LS Power Equity Advisors for $5 billion — a mandatory asset sale stemming from its Calpine acquisition.
