Last Friday, Constellation Energy announced the unexpected restart of Pennsylvania's Three Mile Island Unit 1 nuclear plant, intending to supply power for Microsoft's data centers. This decision stirred positive responses from analysts and resulted in a promising market outlook for the power utility.
Barclays analyst Nicholas Campanella termed the move as "somewhat unexpected by the market," nevertheless, he sees it as a positive turn for the company, as well as for Public Service Enterprise Group and Talen Energy Group. Acknowledging the optimism, Campanella assigned an "overweight" rating on Constellation with an impressive price target of $211.
KeyBanc analysts echoed a similar sentiment, stating that Constellation's contract with Microsoft implies "attractive economics." They anticipate the positive momentum to persist while acknowledging its significant role in demonstrating the value of nuclear generation, especially in the age of AI. Subsequently, KeyBanc also set an "overweight" rating for the stock and raised their price target to $265 from $230.
Following the announcement, Constellation Energy shares experienced an exponential growth of 22%, setting a new all-time high. Despite a minute change in early afternoon trading on Monday, the stocks have seen an approximately 120% increase year-to-date.