Constellation Energy started with Outperform at RBC on potential PTC boost

Constellation Energy started with Outperform at RBC on potential PTC boost (NASDAQ:CEG)

Apr 29, 2022 by Seeking Alpha

Key Facts

  • Allkindza/E+ via Getty Images 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.

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