Energy stock Constellation Energy (CEG) has been out of the limelight for a while, but recently—thanks to a deal that would see it restart what may have been the United States’ greatest nuclear debacle in over 50 years—it has come roaring back. And Citi recently started coverage on Constellation Energy, a move that did not help with Constellation’s investors. Indeed, Constellation shares are down nearly 2% in Tuesday afternoon’s trading.
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According to a report from CNBC, Citi’s coverage, via analyst Ryan Levine, started up today with a Neutral rating and a price target of $284 per share. As for the reason, the report revealed that the whole “restart Three Mile Island” concept may not go smoothly. In fact, restarting Three Mile Island is fairly likely to cost more than Constellation realizes and take longer.
Currently, Constellation is looking at a restart date of sometime in 2028. But even here, Levine et al. believe that the start time may not go off according to plan, especially if the regulatory environment decides to get more heavily involved. The timeline is also quite sensitive; Levine suggests that every month’s delay could cost $0.09 off Constellation’s share price. And for every $1 million in cost overruns, another $0.04. It is a fairly fine needle to thread and has plenty of potential failure points.
Constellation Launches a Charm Offensive
But Constellation is not laboring under the misapprehension that everyone will be happy to see Three Mile Island up and running again. To that end, it has already begun a charm offensive that will, hopefully, inoculate some of the stakeholders involved. It set up a $1 million “environmental initiative” geared toward protecting nature in nuclear plant communities.
The Constellation Leading Environmental Accelerators Network—or “CLEAN”—has already pledged its million bucks to 35 different conservation projects. Grants ranged from $5,000 all the way up to $125,000 and will, hopefully, get people thinking less about fallout and more about shining, well-scrubbed, and oil-free wildlife instead.
Is Constellation Energy a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CEG stock based on 10 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 129.11% rally in its share price over the past year, the average CEG price target of $270.71 per share implies 1.32% upside potential.
