Constellation Energy started with Outperform at RBC on potential PTC boost
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Constellation Energy (NASDAQ:CEG) is initiated with an Outperform rating and $72 price target at RBC Capital on Friday, saying the Section 45 PTC federal production credit, if passed, could lock in a high floor value for nuclear power plants, and "Constellation's moat in the independent power producer group would be secure with this addition."
The PTC, which analyst Shelby Tucker said could be re-introduced in a separate climate bill this year, effectively sets the minimum power price to the low $40s/MWh, providing a floor value unique to nuclear, which could offer "significant option value" to Constellation (CEG).
Valuation has become challenging with commodity prices at 10-year highs, but further multiple expansion can happen if there is momentum for legislation, Tucker said.
Constellation Energy (CEG) "has a ready customer in its former parent of Exelon, but also operations and customers throughout the country for its ESG-friendly electricity generation," Laura Starks writes in a bullish analysis posted on Seeking Alpha.