Key Highlights
- Morgan Stanley initiated coverage on Constellation Energy (CEG) with an Overweight rating and set a $385 price target, suggesting approximately 30.6% potential upside from Tuesday’s closing price of $294.85.
- Shares of CEG climbed 4.2% to $307.04 on Wednesday, despite being down 16.5% for the year and falling 10.6% since tensions escalated with Iran.
- The investment bank identified the current valuation as a compelling buying opportunity, estimating data center contract opportunities alone contribute $70 per share in value.
- The company operates America’s largest nuclear generation fleet at approximately 22 gigawatts and maintains long-term power agreements with Meta and Microsoft.
- Analysts project CEG’s first-quarter earnings will increase 17% to $2.51 per share, while annual revenue is expected to climb 17% to $29.88 billion.
Shares of Constellation Energy (CEG) finished Tuesday’s session at $294.85 before climbing 4.2% to reach $307.04 on Wednesday.
Constellation Energy Corporation, CEG
On Wednesday, Morgan Stanley initiated coverage on Constellation Energy (CEG) with an Overweight rating and established a $385 price target. This projection indicates potential gains of roughly 30.6% from the previous day’s close.
The positive call arrives during a challenging period for shareholders. Year-to-date, CEG has declined 16.5%, with 10.6% of those losses occurring after the outbreak of conflict with Iran. The research team headed by David Arcaro views this 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 note said.
Morgan Stanley’s $385 valuation incorporates multiple growth catalysts: $70 per share attributed to data center contracts, $40 from projected increases in power pricing, and $22 from clean energy credit programs. These components represent significant value potential for a stock currently trading in the $290 range.
Nuclear Power Advantage
Constellation commands the nation’s most extensive nuclear generation portfolio, with capacity totaling approximately 22 gigawatts. Morgan Stanley emphasized several competitive advantages: continuous clean baseload generation operating around the clock, extended asset lifespans, available land and grid connections suitable for data center development, and opportunities for deploying small modular reactor technology at existing sites.
The artificial intelligence-driven nuclear investment thesis has been developing for CEG over time. The stock delivered returns of 91% throughout 2024 and 58% during 2025 before experiencing its current pullback.
The company has secured two significant long-term supply agreements. In 2024, Constellation finalized a 20-year arrangement with Microsoft to deliver nuclear-generated electricity for its data center operations. Nine months afterward, in June 2025, the company announced another 20-year agreement with Meta — committing over 1,100 megawatts from its Clinton Clean Energy Center facility in Illinois.
Morgan Stanley anticipates “further data center contracting opportunities this year.”
Upcoming Catalysts
Constellation plans to unveil its 2026 financial projections and strategic roadmap on March 31. The company declined to issue guidance during its February Q4 earnings release, making the forthcoming announcement particularly significant for investors.
Morgan Stanley identified the March 31 presentation as the “next catalyst for a potential contract announcement.”
Regarding financial performance, Wall Street consensus calls for first-quarter earnings per share to grow 17% to $2.51, accompanied by revenue growth of 30% to $8.84 billion. Full-year projections anticipate earnings of $11.69 per share and revenue reaching $29.88 billion — representing increases of 24.5% and 17%, respectively, compared to 2025 results.
According to InvestingPro data, the broader analyst community forecasts 38% upside potential, modestly exceeding Morgan Stanley’s 30.6% projection.
For the fourth quarter, Constellation delivered adjusted earnings of $2.30 per share, marginally below the $2.31 consensus estimate, while revenue of $6.07 billion substantially exceeded projections of $4.95 billion.
The company has also recently finalized an agreement to divest approximately 4.4 gigawatts of natural gas generation facilities in the PJM region to LS Power Equity Advisors for $5 billion — a transaction mandated as part of its Calpine acquisition.
