Constellation Energy (CEG) Stock Surges 4% on Morgan Stanley's Bullish Upgrade

Key Takeaways

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Morgan Stanley initiated Overweight coverage on Constellation Energy (CEG) with a $385 price target, suggesting approximately 30.6% potential upside from Tuesday’s $294.85 close.
Shares jumped 4.2% to $307.04 on Wednesday, despite trading down 16.5% year-to-date and suffering a 10.6% decline since Iran conflict escalation.
Analysts view the current valuation as an “attractive entry point,” estimating data center contracting opportunities alone contribute $70 per share in value.
The company operates America’s largest nuclear generation fleet at approximately 22 gigawatts, with established power agreements serving Meta and Microsoft.
Analysts anticipate Q1 earnings will climb 17% to $2.51 per share, while annual revenue projections show 17% growth to $29.88 billion.

Constellation Energy (CEG) shares finished Tuesday’s session at $294.85, then surged 4.2% to reach $307.04 during Wednesday trading.

Constellation Energy Corporation, CEG

Morgan Stanley launched coverage of Constellation Energy (CEG) on Wednesday with an Overweight recommendation and established a $385 price objective. This target suggests potential gains of roughly 30.6% above Tuesday’s closing level.

The bullish stance arrives during a challenging period for shareholders. Year-to-date performance shows CEG declining 16.5%, with a notable 10.6% selloff following the onset of Iran military tensions. Analyst David Arcaro and his team interpret this 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.

The $385 price objective from [[LINK_START_2]]Morgan Stanley[[LINK_END_2]] incorporates multiple value components: $70 per share attributed to data center contracts, $40 from anticipated power price appreciation, and $22 stemming from clean energy credit programs. These elements combine to create substantial upside for shares currently trading around $290.

Nuclear Portfolio Advantage

Constellation commands the nation’s most extensive nuclear generation portfolio, boasting approximately 22 gigawatts of installed capacity. Morgan Stanley emphasized several competitive advantages: continuous 24/7 carbon-free baseload generation, extended operational lifespans, readily available land with existing grid connections suitable for data center development, and opportunities for deploying small modular reactor technology on existing sites.

The AI-nuclear investment thesis surrounding CEG isn’t fresh territory. Shares soared 91% throughout 2024 and posted an additional 58% gain in 2025 before experiencing recent headwinds.

The company has already secured two significant long-duration power supply agreements. During 2024, Microsoft signed a 20-year arrangement to procure nuclear-generated electricity for its data center infrastructure. Following nine months later in June 2025, Meta finalized another 20-year commitment — securing more than 1,100 megawatts from Constellation’s Clinton Clean Energy Center located in Illinois.

Morgan Stanley analysts indicated they anticipate “further data center contracting opportunities this year.”

Upcoming Catalysts

Constellation plans to unveil its 2026 financial projections and strategic roadmap on March 31. Management withheld providing forward guidance during February’s Q4 earnings announcement, amplifying investor attention toward the forthcoming update.

Morgan Stanley identified the March 31 presentation as the “next catalyst for a potential contract announcement.”

Regarding earnings expectations, Wall Street consensus calls for first-quarter earnings per share to advance 17% to $2.51, accompanied by revenue growth of 30% reaching $8.84 billion. Full-year projections anticipate earnings of $11.69 per share alongside revenue of $29.88 billion — reflecting year-over-year expansion of 24.5% and 17%, respectively.

Broader analyst consensus compiled by InvestingPro indicates 38% potential appreciation, 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 revenue of $6.07 billion substantially exceeded projections of $4.95 billion.

The company also recently finalized an agreement to divest approximately 4.4 gigawatts of natural gas generation facilities within the PJM territory to LS Power Equity Advisors for $5 billion — a mandatory sale stemming from its Calpine acquisition.

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