On Thursday, BofA Securities revised its stance on Constellation Energy (NASDAQ:CEG), upgrading the stock from Neutral to Buy and increasing the price target to $269 from the previous $237. Trading at $236.6, InvestingPro analysis suggests the stock is currently overvalued relative to its Fair Value. The upgrade was driven by the firm's positive view of Constellation Energy's growth prospects and valuation.
The analyst at BofA Securities highlighted Constellation Energy's unique investment appeal, noting the company's potential for sustained double-digit growth. With a market capitalization of $75 billion and a solid financial health score of GOOD according to InvestingPro, the company's fundamentals support this outlook. The firm's asset mix and business model, which emphasize clean, baseload generation, were also cited as key factors supporting the upgrade.
With a growing demand for energy, tightening supply, and anticipated regulatory clarity, Constellation Energy is seen as well positioned to benefit from these market dynamics. The company's defensive beta of 0.71 and healthy current ratio of 1.7 suggest financial stability.
The analyst expressed the belief that the company's current share price does not fully reflect its potential. For deeper insights into Constellation Energy's valuation and growth prospects, investors can access comprehensive analysis through InvestingPro's detailed research reports, available for over 1,400 US stocks.
In addition to the rating change and price target adjustment, BofA Securities updated its earnings estimates for Constellation Energy for the fiscal years 2024, 2025, and 2026. The new estimates are set at $8.24, $9.20, and $11.33 per share, respectively, marking an increase from the previous estimates of $8.20, $8.99, and $10.86 per share. These projections align with the company's P/E ratio of 28.5x and annual revenue of $24 billion.
The revised outlook from BofA Securities indicates a more bullish view on Constellation Energy's future performance, with expectations of the company's continued growth and favorable positioning in the energy sector.
In other recent news, Constellation Energy has reported robust third-quarter earnings, surpassing expectations with GAAP earnings of $3.82 per share and adjusted operating earnings of $2.74 per share. This strong performance led the company to raise its full-year earnings guidance from $8.00 to a range of $8 to $8.40 per share.
Analysts from BMO (TSX:BMO) Capital Markets, Jefferies, and Mizuho (NYSE:MFG) Securities have adjusted their price targets for Constellation Energy following a recent decision by the Federal Energy Regulatory Commission (FERC).
BMO Capital Markets reduced the stock's price target from $298.00 to $291.00 but maintained an Outperform rating. Jefferies lowered its target to $234.00 from $256.00, maintaining a Hold rating, while Mizuho reduced its target from $264.00 to $235.00, keeping a Neutral rating.
Additionally, Constellation Energy announced the anticipated restart of the Crane Clean Energy Center and the addition of 2,800 megawatts of renewable energy through commercial products CORe+ and CFE (EBR:CFEB) since 2020. The company also plans to introduce 2,000 megawatts of new nuclear capacity by 2027.
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