Hold Rating on Constellation Energy: Strong Performance Overshadowed by Valuation Concerns and Policy Uncertainties

Elizabelle Pang, an analyst from DBS, maintained the Hold rating on Constellation Energy Corporation (CEG – Research Report). The associated price target was lowered to $225.00.

Elizabelle Pang has given her Hold rating due to a combination of factors impacting Constellation Energy Corporation. Despite the company’s strong performance in the fourth quarter of 2024, driven by favorable nuclear production tax credits and market conditions, the valuation of CEG’s stock appears rich. The forward price-to-earnings ratio is higher than historical averages, suggesting limited upside potential in the near term.
Additionally, while CEG is well-positioned to benefit from increasing electricity demand, particularly from data centers, and has announced a strategic acquisition of Calpine Corp, there are concerns about potential headwinds. These include the possible removal of power auctions in key markets and uncertainties surrounding policy changes, such as the hydrogen production tax credit rule. Consequently, Elizabelle Pang recommends a Hold rating, advising investors to look for better entry points.