Shares of nuclear power plant operator Constellation Energy (CEG) surged 8.4% on Thursday after securing two major contracts worth over $1 billion with the U.S. government. Following the announcement of the news, several analysts reiterated a Buy rating on CEG stock, reflecting their optimism about the company’s prospects.
Don't Miss Our New Year's Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
The first contract, a 10-year deal valued at $840 million with the General Services Administration (GSA), requires CEG to provide over one million megawatt-hours of nuclear power annually to more than 13 government agencies.
Under the second contract, worth $172 million, Constellation has agreed to implement energy-saving measures at five federal buildings in Washington, D.C., and Maryland. These measures include improvements to lighting, HVAC systems, and other energy-efficient technologies.
Growing Demand for Nuclear Power
These contracts show increasing interest from tech companies and government agencies in nuclear energy. Importantly, the funds generated from these contracts will enable Constellation to extend the licenses of existing nuclear plants and invest in new machinery and technology to boost output by 135 megawatts.
It must be mentioned that the contracts follow the company’s recent plans to restart a shuttered reactor at the Three Mile Island facility, fueled by a long-term agreement with Microsoft (MSFT).
Analysts Remain Bullish on CEG Stock
Following the news, three analysts reaffirmed their Buy rating on CEG stock. Among these, Bank of America Securities analyst Ross Fowler said that the deal comes at a substantial premium to power prices. The analyst believes this deal will result in a $0.11 increase in earnings for 2025 and a $0.12 increase in earnings for 2026.
Another analyst, Durgesh Chopra from Evercore ISI, raised the price target to $258 from $254. Chopra too expects the contracts to result in an annual EPS accretion of $0.10-$0.15 per share.
Is CEG Stock a Buy?
Turning to Wall Street, CEG has a Moderate Buy consensus rating based on 10 Buys and five Holds assigned in the last three months. At $286.50, the average Constellation Energy price target implies an 18.1% upside potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
