Key Takeaways
- Morgan Stanley has reinstated coverage on Constellation Energy (CEG) with an Overweight recommendation and $385 price objective, suggesting approximately 30.6% potential gain from Tuesday’s $294.85 close.
- Shares of CEG climbed 4.2% to reach $307.04 on Wednesday, despite trailing 16.5% year-to-date and falling 10.6% since escalating Iran conflict tensions.
- The investment bank views current pricing as a compelling opportunity, estimating data center contract potential alone contributes $70 per share to valuation.
- The company manages America’s most extensive nuclear generation portfolio at approximately 22 gigawatts, featuring established power agreements with Meta and Microsoft.
- Analysts anticipate CEG’s first-quarter earnings will climb 17% to $2.51 per share, while annual revenue projections 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 $307.04 during Wednesday trading.
Constellation Energy Corporation, CEG
On Wednesday, Morgan Stanley reinstated its coverage of Constellation Energy (CEG) with an Overweight designation and established a $385 price objective. This projection indicates roughly 30.6% appreciation potential from the previous day’s closing level.
The upgrade arrives during a challenging period for shareholders. CEG has declined 16.5% since the year began, with a 10.6% decrease following the outbreak of hostilities involving Iran. The research group headed by David Arcaro interprets this recent weakness as a buying opportunity.
“Our analysis indicates CEG trades at valuations that reflect existing asset worth ($255/share based on our calculations) while attributing limited premium to additional growth prospects and value creation opportunities,” according to the research note.
Morgan Stanley’s $385 price objective incorporates multiple value components: $70 per share attributed to data center partnerships, $40 from elevated electricity pricing, and $22 from renewable energy credit programs. These elements combine substantially for shares currently trading around $290.
Nuclear Power Advantage
Constellation manages America’s most expansive nuclear generation network, encompassing approximately 22 gigawatts of production capability. Morgan Stanley emphasized several competitive advantages including continuous carbon-free baseline generation, extended facility operational timeframes, available land parcels with grid connections suitable for data center development, and opportunities for deploying advanced small modular reactor technology.
The artificial intelligence-powered nuclear investment thesis represents familiar territory for CEG shareholders. Shares appreciated 91% throughout 2024 and another 58% in 2025 before the recent downturn.
Constellation has secured two significant long-duration supply agreements. During 2024, the company finalized a 20-year arrangement with Microsoft to deliver nuclear-generated electricity for its data infrastructure. Subsequently, in June 2025, another 20-year partnership with Meta was announced — providing more than 1,100 megawatts generated from its Clinton Clean Energy Center located in Illinois.
Morgan Stanley indicated expectations for “additional data center partnership announcements during 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 fourth-quarter results presentation, making the forthcoming announcement particularly significant.
Morgan Stanley identified the March 31 presentation as the “upcoming trigger for possible contract disclosure.”
Regarding financial performance, consensus estimates project first-quarter earnings per share expanding 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 totaling $29.88 billion — reflecting increases of 24.5% and 17% respectively compared with 2025 results.
Broader analyst sentiment, as compiled by InvestingPro, suggests 38% upside opportunity, marginally exceeding Morgan Stanley’s 30.6% forecast.
During the fourth quarter, Constellation reported adjusted earnings of $2.30 per share, narrowly missing the $2.31 consensus projection, while revenue of $6.07 billion significantly exceeded the $4.95 billion estimate.
The organization also recently finalized an agreement to divest approximately 4.4 gigawatts of natural gas generation facilities within the PJM regional market to LS Power Equity Advisors for $5 billion — a disposal necessitated by its Calpine acquisition.
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