These nuclear energy stock plays could rise as much as 50%, analysts say

Posted By: EN Todayon: August 12, 2024In: General Energy News

Constellation Energy and Vistra Corp. are two of the best performing stocks in the market this year, with room for further gains as their nuclear power assets are in hot demand from developers building out data centers to support artificial intelligence, according to analysts. Constellation has surged 62% year to date to become the sixth-best performing stock in the S & P 500 , while Vistra has more than doubled to become the second-best performing stock, only slightly behind AI chipmaker Nvidia . Barclay’s has initiated coverage of Constellation at a buy with a stock price target of $211, implying nearly 11% upside from Friday’s close $189.87 per share. Constellation owns the largest nuclear fleet in the U.S., operating 21 of the country’s 93 reactors. “We see CEG as fundamentally well positioned to serve the growing electrification needs with the value of its nuclear fleet providing carbon-free baseload generation in a market of tightening supply,” Nicholas Campanella, lead analyst for power and utilities at Barclays, told clients in an Aug. 8 note. Campanella sees the recent pullback of Constellation’s stock, down 12% over the past month, as an attractive buying opportunity. CEG YTD mountain Constellation Energy year to date Vistra, which operates six reactors, has been conservative in its financial outlook which provides room for upside to its plan, BMO Capital Markets’ analyst James Thalacker told clients in an Aug. 8 note. BMO raised its price target to $120, indicating 52% upside from Friday’s close of $78.64 per share. Constellation and Vistra have substantial catalysts on the horizon that are not factored into their guidance, as tech companies shop for nuclear reactors to power their energy-hungry data centers , according to the analysts. Joe Dominguez and Jim Burke, the CEOs of Constellation and Vistra, said on the companies’ second-quarter earnings calls that they are in discussions with customers interested in directly connecting data centers to their nuclear plants . Constellation is also exploring the possibility of restarting reactor Unit 1 at Three Mile Island in Pennsylvania, which ceased operations in 2019, as demand for nuclear energy grows. VST YTD mountain Vistra shares year to date “While there has yet to be further communication of a final decision on the unit’s activation, the steep shift in demand for carbon-free energy generation drives the need for additional nuclear generation that reactivation could provide,” Campanella said.