Key Takeaways
- Morgan Stanley reinstated coverage on Constellation Energy (CEG) with an Overweight recommendation and $385 price target, suggesting approximately 30.6% potential gain from Tuesday’s $294.85 close.
- Shares jumped 4.2% to $307.04 on Wednesday, despite being down 16.5% for the year and 10.6% since Iran conflict escalation.
- Analysts view the current valuation as a compelling buying opportunity, estimating data center contracting alone contributes $70 per share in value.
- The company commands America’s largest nuclear generation portfolio at approximately 22 gigawatts, with established power agreements with Meta and Microsoft.
- First-quarter earnings projections show 17% growth to $2.51 per share, while annual revenue estimates point to $29.88 billion, up 17% year-over-year.
Constellation Energy (CEG) shares finished Tuesday’s session at $294.85, then advanced 4.2% to reach $307.04 during Wednesday trading.
Constellation Energy Corporation, CEG
On Wednesday, Morgan Stanley reinstated its analysis of Constellation Energy (CEG) with an Overweight designation and established a $385 price objective. This target signals roughly 30.6% appreciation potential from the prior day’s closing level.
The bullish stance arrives during a challenging period for shareholders. Year-to-date performance shows a 16.5% decline, with a 10.6% retreat coinciding with heightened Middle East tensions. David Arcaro’s research team views this weakness as a strategic opportunity.
“Our calculations suggest CEG trades at levels that primarily reflect existing asset value ($255/share by our estimates), leaving limited premium for additional growth prospects and value creation opportunities,” the analysts noted.
Morgan Stanley’s $385 valuation incorporates multiple growth channels: $70 per share attributed to data center agreements, $40 from elevated electricity pricing, and $22 from clean energy credit programs. These elements combine substantially for shares currently trading around $290.
The Nuclear Power Advantage
Constellation manages America’s most extensive nuclear generation network, encompassing approximately 22 gigawatts of production capacity. Morgan Stanley emphasized the portfolio’s continuous clean power generation, extended operational lifespans, strategically positioned infrastructure suitable for data center development, and opportunities for small modular reactor deployment as critical value drivers.
The artificial intelligence-fueled nuclear investment thesis isn’t unfamiliar territory for CEG. Shares delivered 91% returns throughout 2024 and an additional 58% gain in 2025 before this year’s correction.
The company has secured two significant long-duration supply agreements. A 20-year arrangement with Microsoft was finalized in 2024 to deliver nuclear-generated electricity for its data infrastructure. Subsequently, in June 2025, a comparable 20-year pact with Meta was announced — providing more than 1,100 megawatts from its Clinton Clean Energy Center facility in Illinois.
Morgan Stanley analysts anticipate “additional data center partnership announcements throughout the current year.”
Upcoming Developments
Constellation plans to unveil its 2026 financial projections and strategic direction on March 31. Management withheld forward guidance during February’s fourth-quarter results presentation, amplifying investor focus on the forthcoming announcement.
Morgan Stanley identified the March 31 presentation as the “next potential trigger for a contract disclosure.”
Regarding financial performance, Street consensus anticipates first-quarter earnings per share advancing 17% to $2.51, accompanied by 30% revenue expansion to $8.84 billion. Full-year projections call for $11.69 per share in profit and $29.88 billion in revenue — reflecting 24.5% and 17% increases, respectively, compared to 2025 results.
Broader Wall Street sentiment, according to InvestingPro data, indicates 38% upside potential, marginally exceeding Morgan Stanley’s 30.6% projection.
During the fourth quarter, Constellation delivered adjusted earnings of $2.30 per share, narrowly missing the $2.31 consensus estimate, while $6.07 billion in revenue substantially exceeded the $4.95 billion forecast.
The company additionally finalized an agreement to divest approximately 4.4 gigawatts of natural gas generation facilities within the PJM region to LS Power Equity Advisors for $5 billion — a transaction mandated by regulatory requirements following its Calpine acquisition.
