Constellation Energy Stock Rises As Wall Street Praises Calpine Deal, But Retail Isn’t Convinced

Constellation Energy Corp. (CEG) stock gained over 3% in morning trade on Tuesday after multiple analysts raised their price targets in response to the company's acquisition of Calpine. 

The transaction, announced last week, is being lauded for its strategic value and potential to enhance Constellation's role in addressing resource adequacy challenges in the energy sector by Wall Street.

Guggenheim raised its price target for Constellation Energy to $378 from $328, maintaining a ‘Buy’ rating on the stock, according to TheFly. 

Analysts at the brokerage described the Calpine deal as a “resource adequacy long call” that aligns with Constellation’s strategic priorities, particularly in long-term contracting synergies. 

They called the deal a “very strong transaction” with an attractive valuation that reinforces several of their investment theses.

Jefferies also raised its price target, moving it to $274 from $234, while maintaining a ‘Hold’ rating on Constellation Energy’s stock, as per TheFly.

It characterized the deal as "value accretive" and noted its positive implications for Constellation’s ongoing focus on data center energy contracts. 

However, Jefferies flagged that Constellation’s current valuation already prices in significant future growth, creating a less favorable risk-reward dynamic compared to peers.

Constellation remains the largest producer of carbon-free energy in the United States, operating across 48 states. 

The company has also projected double-digit earnings growth through the decade.

Constellation Energy Corp. Sentiment and Message Volume on Jan.14 as of11:35 a.m. ET | Source: Stocktwits

On Stocktwits, retail sentiment around Constellation Energy dipped to ‘bearish’ from ‘bullish’ despite the favorable analyst revisions. Message volume remained at ‘normal’ levels, reflecting mixed reactions among investors.

One user commented that the increasing number of mergers in the power sector could mean that the common man could end up paying more for utilities.

Many felt remorseful that they didn’t sell the stock last week when it hit an all-time high.

Shares of Constellation reached an all-time high of $310 last week following the Calpine announcement but are currently trading 7.5% below that level. 

On Monday, Mizuho also raised its target to $307 from $235 and kept a ‘Neutral’ rating on the stock, according to TheFly.

The brokerage highlighted that the acquisition adds 121 terawatt hours (TWh) of generation capacity and 59 TWh of retail contracts to Constellation's portfolio. 

Mizuho projects 20% earnings accretion by 2026, translating to approximately $2 per share in earnings.

Over the past year, the stock has surged 155%, supported by strong clean energy initiatives and growing demand for power from data centers and artificial intelligence (AI) applications.

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