By Mackenzie Tatananni

Constellation Energy stock offers an appealing balance of potential rewards relative to the risks amid the selloff triggered by President Donald Trump's latest storm of tariffs, Citi Research said.

Analysts led by Ryan Levine upgraded the stock to Buy from Neutral in a note Wednesday while slashing their price target to $232 from $334. Shares were up 2.9% to $190.28, leaving room for the stock to rise 22% to meet Citi's target.

Even as recession fears rock the market, analysts see "select opportunities" emerging for names like Constellation, the largest producer of carbon-free energy in the U.S.

Shares are down 45% from a record closing high of $347.44 reached in late January. The stock has fallen nearly 11% since the end of the session on April 2, when Trump unveiled tariffs of at least 10% on all imports to the U.S., plus additional levies on many countries.

"We think the $232 valuation is achievable without any behind-the-meter deals or unannounced growth," the Citi team wrote. Behind-the-meter arrangements are meant to supply power to customers without passing through the grid.

Any change to policies in the market for artificial-intelligence power would create significant room for the stock to gain, the analysts said. On the flip side, the price could fall as low as $181 with no co-location data-center deals.

The new price target takes into account Constellation's pending acquisition of Calpine Power. Earlier this year, the companies entered into a definitive agreement for Constellation to buy Calpine in a cash-and-stock transaction valued at roughly $16.4 billion. If Constellation were to break the deal, the company would have to shell out a $500 million termination fee, the analysts noted.

Shares of Constellation Energy have declined nearly 18% this year. The sector was rocked in February after analysts at TD Securities said Microsoft had canceled several data center leases, amounting to a couple of hundred megawatts. Just a month earlier, news related to Chinese AI start-up DeepSeek sent Wall Street into a spiral, with investors fearing that the advent of less power-hungry AI would hurt demand for data centers.

The VanEck Uranium and Nuclear ETF, which counts Constellation among its largest holdings, has lost more than 17% since the start of the year. It has fallen 8.6% since the April 2 tariff news.

The ETF gained 0.8% on Wednesday as nuclear energy stocks rose. Vistra was up 0.7%, GE Vernova rallied 1.9%, NuScale Power rose 3.1%, and the nuclear start-up Oklo jumped 5%. The S&P 500 and the tech-heavy Nasdaq Composite were up 0.9% and 1.9%, respectively.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 09, 2025 12:14 ET (16:14 GMT)

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