TLDR
- Morgan Stanley reinstated Constellation Energy (CEG) with an Overweight rating and $385 price target on Wednesday, suggesting approximately 30.6% upside potential from the prior session’s close of $294.85.
- Shares of CEG climbed 4.2% to reach $307.04 on Wednesday, despite trading down 16.5% for the year and declining 10.6% since tensions with Iran escalated.
- The investment bank characterized the current valuation as an “attractive entry point,” estimating data center contract opportunities alone contribute $70 per share in value.
- The company operates America’s largest nuclear power fleet with approximately 22 gigawatts of capacity 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 full-year revenue is expected to climb 17% to $29.88 billion.
Constellation Energy (CEG) stock finished Tuesday’s trading session at $294.85 before advancing 4.2% to $307.04 on Wednesday.
Constellation Energy Corporation, CEG
Morgan Stanley reinstated coverage of Constellation Energy (CEG) on Wednesday with an Overweight recommendation and established a $385 price objective. This target implies approximately 30.6% appreciation potential from the previous day’s closing level.
The bullish stance arrives during a challenging period for the equity. CEG shares have declined 16.5% since the start of the year, with a 10.6% decrease registered after conflict with Iran intensified. 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 research note stated.
Morgan Stanley’s $385 valuation target segments value across multiple growth channels: $70 per share attributed to data center contracts, $40 from anticipated power price increases, and $22 from clean energy credit programs. These components represent substantial upside for a stock currently trading in the low $300s.
The Nuclear Case
Constellation maintains the nation’s largest nuclear generation portfolio, delivering approximately 22 gigawatts of total capacity. Morgan Stanley emphasized several competitive advantages including round-the-clock clean baseload generation, extended operational lifespans, strategic land positioning with existing grid connections suitable for data center deployment, and opportunities for small modular reactor development.
The artificial intelligence-fueled nuclear investment thesis has been central to CEG’s performance. Shares surged 91% throughout 2024 and gained another 58% in 2025 before encountering headwinds this year.
Constellation has secured two significant long-duration power supply agreements. During 2024, the company finalized a 20-year arrangement with Microsoft to deliver nuclear-generated electricity to the tech giant’s data center infrastructure. Subsequently, in June 2025, it executed another 20-year agreement with Meta — committing over 1,100 megawatts from its Clinton Clean Energy Center facility in Illinois.
Morgan Stanley indicated expectations for “further data center contracting opportunities this year.”
What’s Coming Up
Constellation plans to unveil its 2026 financial projections and strategic roadmap on March 31. Management declined to issue forward guidance during the February fourth-quarter earnings announcement, amplifying investor attention toward the forthcoming presentation.
Morgan Stanley identified the March 31 event as the “next catalyst for a potential contract announcement.”
Regarding earnings performance, Wall Street analysts anticipate first-quarter earnings per share will grow 17% to $2.51, accompanied by revenue expanding 30% to $8.84 billion. Full-year projections call for profit of $11.69 per share and revenue reaching $29.88 billion — reflecting growth of 24.5% and 17%, respectively, compared to 2025 results.
The broader Street consensus tracked by InvestingPro indicates 38% potential appreciation, modestly exceeding Morgan Stanley’s 30.6% forecast.
During the fourth quarter, Constellation delivered adjusted earnings of $2.30 per share, slightly trailing the $2.31 analyst consensus, while revenue of $6.07 billion substantially exceeded the $4.95 billion estimate.
The company also recently finalized an agreement to divest approximately 4.4 gigawatts of natural gas generation assets within the PJM interconnection to LS Power Equity Advisors for $5 billion — a transaction mandated as part of its Calpine acquisition integration.
