Citigroup has revised its rating on Constellation Energy from Buy to Neutral, spotlighting valuation concerns after a notable stock rally. Despite boosting its price target to $318, analysts believe the near-term upside is now limited, especially following the company’s high-profile 20-year clean energy deal with Meta Platforms.
This strategic agreement will see Constellation supply over 1,100 megawatts of nuclear energy to Meta, starting in June 2027, from its Clinton Clean Energy Center. While the deal is expected to add an estimated $12 per share in value, the stock’s recent rally to highs near $342 appears to have already priced in this future benefit.
The stock has climbed approximately 37% year-to-date and is hovering near its all-time highs. Market excitement over the Meta partnership and Constellation’s role in powering AI data centers with clean energy has created a short-term valuation spike, which Citigroup flagged as a reason to take a more neutral stance going forward.
💰 On the dividend front, Constellation Energy maintains a relatively conservative profile. The current dividend yield is 0.49%, with an annual payout of $1.48 per share. Its payout ratio stands at just 15.6%, well below the sector average, signaling a focus on growth and capital retention over high shareholder distributions. While the dividend grew 17% in the past year, it remains modest compared to peers in the utility sector.
Constellation Energy’s long-term potential remains compelling, especially as demand for clean, nuclear-powered energy intensifies. However, given the recent run-up in stock price, investors may find limited short-term reward, aligning with Citigroup’s decision to downgrade to Neutral.