By Kit Norton

Never mind that Constellation Energy shares are down nearly 11% since the start of the war in Iran. Morgan Stanley analysts say shares of the largest producer of nuclear power in the U.S. have the potential for 30% gains from here.

The Morgan Stanley analysts, led by David Arcaro, resumed coverage of Constellation Energy stock at an Overweight rating and a price target of $385, representing 30.6% upside compared to Tuesday's closing price of $294.85. The war has put all things energy, including coal, natural gas, and oil, in the limelight.

Morgan Stanley's optimism is in line with the bullish, AI-driven, narrative around nuclear energy, which propelled Constellation Energy stock to gains of 58% in 2025 and 91% in 2024.

Arcaro noted that Constellation Energy's nuclear fleet provides stable clean baseload power and is ready for interconnection with data centers.

Constellation Energy stock rose 4.2% to 307.04 on Wednesday. The S&P 500 component entered Wednesday down 16.5% so far this year, including a 10.6% decline since the Iran war began. However, Morgan Stanley thinks Constellation Energy is now at an "attractive entry point with catalysts ahead."

"We estimate CEG is priced at a level that values the existing assets ($255/share on our math) with modest value for incremental growth and value upside opportunities," the note said.

The firm's price target values potential data center contracting opportunities at $70 a share, higher power prices at $40 a share, and the value of its clean energy at $22 a share.

Constellation Energy is expected to provide its 2026 financial outlook and strategy on March 31, after deciding against outlining guidance when it reported fourth-quarter earnings in February.

Morgan Stanley sees this as the "next catalyst for a potential contract announcement."

In June 2025, Constellation Energy signed a 20-year energy deal to fuel Facebook-parent Meta Platforms' AI ambitions. Under the agreement, Meta will purchase more than 1,100 megawatts of nuclear energy from Constellation's Clinton Clean Energy Center in Clinton, Ill.

Constellation Energy's deal with Meta came nine months after it sealed a two-decade contract with Microsoft to provide nuclear power for the tech giant's data centers.

"We expect further data center contracting opportunities this year," the Morgan Stanley analysts said Wednesday.

They also noted that political pushback on data center activity, substantial intervention in wholesale power markets, changes in the nuclear policy backdrop, or a decline in customer appetite for contracts with existing power plants are all risks to the bullish thesis.

Wall Street expects Constellation Energy's first-quarter earnings to rise 17%, to $2.51 a share, with revenue increasing 30% to $8.84 billion, according to FactSet. For the full year, Wall Street forecasts the nuclear energy provider's profit coming in at $11.69 a share and sales totaling $29.88 billion, representing growth of 24.5% and 17%, respectively compared with 2025.

Write to Kit Norton at kit.norton@barrons.com

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March 25, 2026 14:57 ET (18:57 GMT)

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