Bank of America sees potential for Constellation Energy that the market hasn’t fully priced in. Analyst Ross Fowler upgraded the stock to buy from neutral and hiked his price target by $32 to $269. With that, he expects shares to jump 13.7% over the next year from Wednesday’s close. Fowler said Constellation can continue to thrive as grid operator PJM Interconnection faces a power deficit. Constellation is PJM’s largest supplier of clean baseload power. Data centers are considered key to the stock’s upside, the analyst said. Companies have been looking for clean and efficient ways to supply data centers with the power needed to grow artificial intelligence, in some cases turning to nuclear energy. Earlier this year, Constellation announced it planned to restart operations at Three Mile Island in four years. Additionally, while Constellation could see downside from declining power prices, he said that should be offset by tax credits that are expected to remain in place due to bipartisan support. “We believe CEG offers a unique investment opportunity, with sustained double-digit growth, an asset mix and business model that provides clean, baseload generation, and a compelling valuation relative to peers,” Fowler wrote to clients on Thursday. “We believe CEG is in the best position to prosper from rising demand, tightening supply, and likely soon to come regulatory clarity.” “This potential is not reflected in its current share price,” he added. “As such it is undervalued.” CEG YTD mountain CEG, year to date Constellation shares jumped 2.7% in Thursday’s premarket trading following Fowler’s upgrade. The move puts the analyst in the majority of Wall Street with buy-equivalent ratings, according to LSEG. Shares have surged more than 102% in 2024.
Bank of America upgrades Constellation Energy, calls shares ‘undervalued’