Constellation Energy Corporation (CEG) Stock; Drops 4% After Citi Downgrade, Rebounds in Premarket

TLDR;

Constellation Energy stock fell over 4% after Citi downgraded the company to neutral from buy Despite the downgrade, Citi raised its price target from $232 to $318, reflecting confidence in long-term growth prospects. The company’s 20-year power purchase deal with Meta and its acquisition of Calpine Energy underpin optimism among investors. Nuclear energy sector momentum driven by recent federal support is boosting investor sentiment.

Shares of Constellation Energy Corporation (CEG) experienced a sharp decline on Wednesday, falling more than 4% following a downgrade from Citi. The brokerage firm shifted its rating on the energy company from “buy” to “neutral,” citing concerns about the stock’s current valuation after a strong rally earlier this year.

Despite the setback, Constellation Energy shares bounced back modestly in early premarket trading on Thursday, reflecting ongoing investor interest.

Citi Downgrade Highlights Valuation Concerns

Citi’s note released on Wednesday revealed that although the stock has been performing well, the gains might have already priced in much of the company’s near-term upside. The downgrade followed a remarkable rally this year, with Constellation Energy’s shares increasing roughly 34% year-to-date. Citi also raised its price target from $232 to $318 per share, signaling that while the valuation is stretched, there is still underlying confidence in the company’s long-term prospects.

Constellation Energy Corporation (CEG)

The brokerage acknowledged several recent positive developments, including a significant 20-year power purchase agreement with Meta Platforms. This deal, which involves Meta buying about 1.1 gigawatts of nuclear power from the Clinton Clean Energy Center starting in mid-2027, was estimated by Citi to add approximately $12 in value per share. Even so, Citi believes that much of this benefit is already reflected in the current stock price, leading to the neutral rating.

Strong Deal Pipeline Supports Optimism

Constellation Energy’s recent activity, especially the agreement with Meta this week, underscores the company’s growing footprint in the clean energy sector. Earlier this year, the company announced its $16.4 billion acquisition of Calpine Energy, a move aimed at expanding its power generation portfolio amid rising demand. In May, executives expressed confidence in securing further long-term customer agreements, a factor supporting the strategic rationale behind the acquisition.

Market participants appear divided on how these developments will influence the stock. While Citi tempers expectations due to valuation concerns, retail investors remain optimistic. Social media sentiment on platforms like Stocktwits has stayed highly bullish, with message volumes on the stock spiking alongside the price movements. Some investors anticipate that Wall Street price targets could climb an additional 10 to 15% after the Calpine deal officially closes in the second half of the year.

Nuclear Energy Momentum Adds Fuel

The broader nuclear energy sector has recently benefited from supportive regulatory moves. In the past month, several executive orders from the White House have aimed to accelerate nuclear power development. These include reforms at the Nuclear Regulatory Commission, faster approval processes for new reactors, greater federal land access for uranium mining, and increased funding for new reactor projects. These policy changes have helped lift investor sentiment around nuclear power stocks, including Constellation Energy.

The renewed momentum in nuclear energy, combined with Constellation’s expanding contract portfolio and acquisition strategy, suggests a resilient outlook despite short-term volatility. The stock’s modest rebound in Thursday’s premarket session indicates that investors may be looking past the Citi downgrade as a temporary market reaction.

For now, the trading action around CEG reflects a mix of caution and confidence, with investors closely watching for upcoming catalysts that could validate the higher price targets set by analysts. The stock’s performance in the coming weeks will be a key indicator of whether this rebound can be sustained.

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