Constellation Energy (CEG), a top nuclear energy provider, received several bullish analyst comments after the S&P 500 component announced a 10-year, $840 million contract with the U.S. General Services Administration to supply power to facilities of more than 13 government agencies.
Constellation Energy stock rose early Friday after leading nuclear power stocks sharply higher Thursday.
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Evercore ISI analyst Durgesh Chopra late Thursday raised the firm’s price target on Constellation Energy to 258 from 254 while keeping an outperform rating on the shares. Chopra wrote that the government contract adds about 10 cents to 15 cents per share to annual EPS.
Meanwhile, Bank of America analysts reiterated a buy rating and their 269 price target on CEG after the deal, as the firm updated its 2025 and 2026 annual profit forecast.
The $840 million government contract begins in April with Constellation Energy set to supply energy to the Federal Reserve System, the Social Security Administration and the Army Corps of Engineers, among other agencies. Constellation Energy was also awarded a separate $172 million energy savings performance contract to improve energy efficiency.
Morgan Stanley analyst David Arcaro wrote late Thursday that the “pricing looks very attractive and could be a positive read-through to future deals.”
Arcaro calculates a price premium of around $30-$40 per megawatt hour in the deal, bringing it to an $84 per megawatt hour pricing level. Market power prices will range from around $40 to the low $50s per megawatt hour in 2026-2027 in the region, according to Morgan Stanley.
“This is a small deal but indicates attractive pricing and expands the (total addressable market) vs. what we were expecting,” Arcaro wrote.
Nuclear Stocks
Constellation Energy stock advanced 2% to 248.06 during market action on Friday. Shares soared 8.5% to 242.60 on Thursday, just closing above their 50-day line. CEG stock has a consolidation pattern with a 288.75 buy point, but a downward-sloping trendline would offer an entry around 250.
Fellow S&P 500 energy stock Vistra (VST) gained 3% to 154.44 on Friday. The S&P 500 stock jumped 8.6% to 149.67, moving above its 50-day moving average.
VST was a top performing S&P 500 component in 2024 on the strength of its 260% annual gain.
UBS cut its CEG price target to 289 from 307 while raising its VST target to 174 from 161.
Meanwhile, Talen Energy (TLN) edged up 1.4% to 215.13 after bouncing off its 50-day line on Thursday, galloping 5.3% higher to 212.23.
Both Vistra and Talen flashed aggressive entries Thursday.
Thursday’s federal contract announcement comes after Constellation Energy on Sept. 20 signed a two-decade contract with Microsoft (MSFT) to provide nuclear power for the tech giant’s data centers. The deal pushed many nuclear stocks and related companies higher through the latter part of 2024.
In September and October, Amazon.com (AMZN), Alphabet (GOOGL) and Oracle (ORCL) also all announced decisions to invest in the developing small modular reactor nuclear technology.
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Constellation Energy stock has an 81 Composite Rating out of 99. Additionally, the S&P 500 nuclear stock has an 84 Relative Strength Rating and its EPS Rating is 55 out of 99.
Please follow Kit Norton on X @KitNorton for more coverage.
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