Constellation Energy cut at BofA following strong run
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Constellation Energy (NASDAQ:CEG) -5.1% in Tuesday's trading as Bank of America downgraded shares to Neutral from Buy with a $88 price target, down from $104 previously, citing higher operating costs, maintenance capex and nuclear fuel costs.
Constellation Energy (CEG) was one of the S&P 500's top performers in 2022, fueled by the surge in natural gas and power prices to multi-year highs as well as the enactment of the Inflation Reduction Act, but without further favorable estimate revisions, BofA analyst Paul Zimbardo sees fewer positive catalysts for the stock to drive a positive re-rating.
"Overall we still see merits in the bull case and continue to believe that CEG offers a reasonable risk/reward profile with upside potential tied to higher natural gas/power prices, but we simply see less potential share appreciation after the recent relative strength," Zimbardo wrote.
Earlier Tuesday, Constellation Energy (CEG) unveiled plans to spend $800M to upgrade equipment to increase production at two nuclear generating stations in Illinois.