Analyst Elizabelle Pang of DBS maintained a Hold rating on Constellation Energy Corporation (CEG – Research Report), boosting the price target to $250.00.
Elizabelle Pang has given her Hold rating due to a combination of factors including Constellation Energy Corporation’s (CEG) recent accomplishments and its current market valuation. Pang recognizes the positive aspects, such as CEG’s largest power purchase agreement with Microsoft, which is expected to significantly boost the company’s earnings per share growth to more than 13% CAGR from 2024 to 2030. This growth rate surpasses the previous guidance and market consensus. Additionally, the demand for clean energy led by the data center industry (DC) is seen as a strong driver for CEG’s earnings, with the company strategically positioned to benefit from this burgeoning market demand.
However, despite these positive indicators, Pang downgraded the rating from Buy to Hold, mainly due to the stock’s rich valuation following a sharp increase in share price. CEG’s stock trades at a forward price-to-earnings ratio significantly higher than its peers, which suggests a limited upside potential from its current price level. Pang suggests that investors should consider better entry points, given the premium valuation. Moreover, key risks such as extreme weather, policy uncertainties, and inflationary pressures on fuel expenses are also factors that could potentially cap earnings growth, thereby justifying a more cautious approach.
In another report released on September 24, Bank of America Securities also assigned a Hold rating to the stock with a $263.00 price target.
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Constellation Energy Corporation (CEG) Company Description:
Constellation Energy Corp offers energy solutions. It provides clean energy and sustainable solutions to homes, businesses, the public sector, community aggregations, and a range of wholesale customers (such as municipalities, cooperatives, and other strategics). The company offers comprehensive energy solutions and a variety of pricing options for electric, natural gas, and renewable energy products for companies of any size.