Constellation Energy falls as BofA downgrades, sets Street-low PT

Cerro Grande Mining

21/02/2023 15:45

** Constellation Energy Corp's  CEG.O  shares down 4.1% at
$81.12 on Tues as BofA Global Research cuts to "neutral" from
"buy"
    ** CEG worst performer in S&P 500 Utilities index  .SPLRCU ,
which is off 1.0% amid broader market slide  .N 
    ** BofA reduces price objective from $104 to $88, lowest on
the Street, per Refinitiv
    ** BofA analyst Paul Zimbardo points out he has been bullish
on CEG since before spin-off from Exelon Corp  EXC.O  last year,
noting shares have roughly doubled over the past 12 months
    ** CEG a consensus long given visible free cash flow (FCF)
generation but latest increase in operating costs, maintenance
capex and nuclear fuel investment highlights that the Federal
Production Tax Credit (PTC) only provides protection on the
'pricing' element, Zimbardo says in note
    ** Revised price objective based on 2025 blended 8.8% FCF
yield, comprised of $77 for PTC scenario + $11 for merchant FCF,
he says
    ** Now, 10 or 14 analysts rate CEG "buy" or higher, rest
"hold", per Refinitiv; median PT $97
    ** CEG shares closed at $53.01 in their Feb 2, 2022 debut
 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com))