Several S&P 500 nuclear energy stocks received price target hikes following Tuesday's announcement that Constellation Energy signed a 20-year energy deal to fuel Facebook-parent Meta Platform's "AI ambitions."
Bank of America analysts early Wednesday raised their price target on S&P 500 nuclear utilities play Vistra to 193, up from its previous 167. They also hiked the price target on S&P 500 component Constellation Energy to 343, up from 318. The note also increased BofA's price target on fellow nuclear stock Talen Energy to 280 from its previous 258 target.
Bank of America wrote Wednesday that Constellation Energy's agreement with Meta increases the likelihood of more data center deals with energy providers to be announced soon.
Meanwhile, Wolfe Research analyst Steve Fleishman raised the firm's price target on Constellation Energy to 350 from 335 and kept an outperform rating. Fleishman noted that the Constellation Energy-Meta deal is "another marker for nuclear value upside."
However, Citi analysts downgraded Constellation Energy to neutral from buy while increasing the price target to 318, up from 232. Citi cited valuation for the downgrade following the CEG stock rally and the Meta power agreement announcement. Based on Citi's analysis, the deal adds $12 per share of value to Constellation.
S&P 500: The Constellation Energy-Meta Deal
Meta will purchase more than 1,100 megawatts of nuclear energy from Constellation's Clinton Clean Energy Center in Clinton, Ill. The deal will support the relicensing and continued operations of the Clinton nuclear facility, beginning in June of 2027. The S&P 500 company added that the deal with Meta will expand Clinton's energy output by 30 megawatts. Constellation did not reveal financial details of the arrangement.
Constellation Energy's 20-year deal with Meta comes nine months after it sealed a two-decade contract with Microsoft in September to provide nuclear power for the tech giant's data centers.
"We are excited to partner with Constellation and the Clinton community to ensure the long-term operations of the nuclear plant, add new capacity, and help preserve over 1,000 jobs. Securing clean, reliable energy is necessary to continue advancing our AI ambitions," Urvi Parekh, Head of Global Energy at Meta, said in the press release Tuesday.
S&P 500 Nuclear Giant Inks Meta To Two-Decade Deal
Jefferies analyst Paul Zimbardo estimated Tuesday that the price Meta is paying for the power appears to be less than what Microsoft is paying. Zimbardo estimates Meta will pay around $80 per megawatt hour while the Constellation Energy-Microsoft deal was priced around $110 per megawatt hour.
Morgan Stanley analyst David Arcaro on Wednesday also estimated the potential contract price for the deal is in the mid-$80s per megawatt hour.
S&P 500: More Deals Coming?
Arcaro wrote Wednesday that the Constellation-Meta agreement is positive for other companies with nuclear fleets. This includes Vistra, Talen energy and Public Service Enterprise.
The Morgan Stanley analyst wrote that the Meta deal with Constellation Energy is "highly replicable — it covers 100% of the output of the plant, requires no regulatory approval, and involves no new infrastructure so it is highly margin and cash accretive."
"Now three hyperscalers (META, AMZN, MSFT) have signed deals supporting nuclear energy assets to power growing AI infrastructure, reinforcing the premium value of these assets," Arcaro added.
The analyst also noted that Constellation Energy suggested on its Q1 earnings call that it was working on multiple deals and that "This could be the first of several contracts to watch for this year."
Nuclear Stocks
Constellation Energy fell 4.3% to 299.54 in Wednesday's stock market action. On Tuesday, the S&P 500 giant soared as high as 342 before retreating, closing down around 0.1% to 313.03.
CEG is currently just above a 296.17 handle buy point from a very deep base, according to analysis of MarketSurge charts. The S&P 500 stock is up around 34% this year, and within 15% of its all-time high of 352 from Jan. 23.
Meanwhile, fellow S&P 500 stock Vistra declined 1.9% Wednesday. Talen Energy edged up 1.8% in stock market trade.
Small modular reactor, or SMR, focused Oklo fell 1.4% during the stock market action Wednesday. Similarly, NuScale Power lost about 2% Wednesday. Nano Nuclear Energy moved 1.5% higher in Wednesday's stock market.
Uranium miner Centrus Energy soared 7.3% while uranium refiner Cameco edged 0.4% higher. Energy Fuels, a uranium exploration and mining play, advanced 2.6% during Wednesday's stock market trading.
Constellation Energy stock has a 91 Composite Rating out of a best-possible 99. The S&P 500 stock also has a 95 Relative Strength Rating. The nuclear stock has a 41 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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