Constellation Energy cut at Credit Suisse on low free cash flow outlook
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Constellation Energy (NASDAQ:CEG) -2.4% in Wednesday's trading as Credit Suisse downgraded shares to Neutral from Outperform with an $83 price target, trimmed from $91, citing a lower ongoing free cash flow outlook, mainly due to cost pressures and increases in nuclear fuel spending.
Constellation Energy (CEG) "is thematically supported as the only public way to get exposure to U.S. nuclear with the PTC providing long-term visibility on cash flows, [but] shares now look expensive to us at a single-digit FCF yield with the well-previewed capital allocation update out of the way," analyst Nicholas Campanella wrote.
The stock likely will be more susceptible to commodity volatility this year and lacking any catalysts until there is more clarity on production tax credits, which is not expected until the end of 2023, Campanella said.
Following strong gains for Constellation (CEG) shares in 2022, Bank of America recently downgraded shares to Neutral from Buy.