Shares of Constellation Energy falls on Citi downgrade after significant rally this year

Shares of Constellation Energy Corp (CEG) rebounded in Thursday's early premarket session after they fell 4.3% to $299.5 on Wednesday, dragged by a rating downgrade by Citi. 

The brokerage, however, raised the price target to $318 from $232.

In a note released Wednesday, Citi lowered Constellation Energy’s rating to ‘neutral’ from ‘buy,’ citing the stock’s valuation. The firm noted that the stock has been rallying this year on the back of deal wins, including a recent power purchase agreement with Meta Platforms (META). The stock has gained nearly 34% year-to-date.

On Tuesday, Meta signed a 20-year agreement with Constellation Energy to purchase approximately 1.1 gigawatts (GW) of nuclear power from the Clinton Clean Energy Center in Illinois, starting in June 2027. Based on Citi’s analysis, the Meta deal adds $12 per share of value to Constellation shareholders.

The stock surged more than 12% in pre-market trade on Tuesday, but pared the gains to close 0.1% lower.

In May, the company stated it is close to securing long-term customer agreements, adding that rising power demand supported the rationale behind its $16.4 billion acquisition of Calpine Energy announced in January.

Citi believes much of the benefit from such agreements has already been priced into the stock.

Despite the downgrade, retail sentiment on Stocktwits remained ‘extremely bullish,’ accompanied by ‘extremely high’ message volumes.

CEG sentiment and message volume as of 5:42 a.m. ET, June 5 | source: Stocktwits

One user believes that the price targets of Wall Street firms could increase by 10 to 15% once the acquisition of Calpine Energy closes in the second half of the year.

Nuclear stocks rallied last month after U.S. President Donald Trump signed a series of executive orders to expand nuclear energy, including Nuclear Regulatory Commission (NRC) reforms, expedited reactor approvals, federal land access for uranium, and new reactor development support.

In Thursday's early premarket session, Constellation Energy stock is up 0.59% at $301.30.

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