Jefferies Financial (JEF) analyst Paul Zimbardo came out with a word recently concerning utility Constellation Energy (CEG). That word was “double,” and that caught a lot of investors’ attention, sending the share price higher in Monday afternoon’s trading session.
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The analyst report points to the recent deal set up between technology giant Microsoft (MSFT) and Constellation Energy, which will provide a whole lot of energy to Microsoft to drive its future cloud computing and artificial intelligence (AI) operations. In fact, there are reports that Constellation plans to restart Three Mile Island, the infamous site of one of America’s biggest nuclear disasters, so that Microsoft can shell out somewhere around $112 per megawatt-hour for power.
Jefferies said in a note to clients that the deal with Microsoft might ultimately double CEG stock. Analyst Paul Zimbardo does see the U.S. presidential election hurting the deal no matter who wins. The project has been in the works for over a year, and with nuclear power increasingly bipartisan, more energy from nuclear reactors seems to be the way to go.
All This and a Price Hike too
Jefferies outlook on CEG stock comes as analysts at KeyBanc raised their price target on Constellation Energy’s stock to $279 from $265 previously, while keeping an Overweight rating on shares. KeyBanc added that a nuclear renaissance in the U.S. might now be underway. While not all nuclear plants are likely to restart, we could potentially see new interest in building entirely new ones… if the politics do not interfere too strongly, said KeyBanc.
Is Constellation Energy Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CEG stock based on four Buy, 10 Hold and one Sell ratings assigned in the past three months, as indicated by the graphic below. After a 151.05% rally in its share price over the past year, the average CEG price target of $13.19 per share implies 25.44% upside potential.
