Constellation Energy (CEG) has been one of the S&P 500’s top performers in recent years thanks to America’s push toward carbon-free energy.
But its latest move — a $16.4 billion bid for Houston-based Calpine — has drawn scrutiny from regulators and analysts, raising fresh risks for a company once prized for its nuclear stability.
Before trade war tensions roiled the market, CEG shares had surged as high as $352, marking a staggering 677% gain over the past three years.
For much of that stretch, Constellation even outpaced chip giant Nvidia (NVDA), now the world’s third-largest company.
Its latest rally came on the heels of the Calpine deal, which would expand Constellation’s energy portfolio beyond its core nuclear fleet to include natural gas and geothermal assets.
That shift doesn't come without risk.
While Constellation has long been viewed as a low-volatility utility play, Calpine’s heavy exposure to natural gas introduces new commodity-linked uncertainty, experts say.
“[Constellation] is highly regarded by investors for its heavy tilt toward stable, lower-risk nuclear power generation,” said analysts at Enverus Intelligence Research.
The research house notes that nuclear accounts for nearly 90% of Constellation’s current output. In contrast, Calpine’s gas-heavy mix “carries significantly higher commodity risk.”
Worse, Constellation is locked into the deal with a $500 million termination fee, which makes backing out a very, very expensive move.
The Maryland Office of People’s Counsel has opposed the acquisition, citing potential anticompetitive concerns. Other groups—including the Pennsylvania Office of Consumer Advocate, Public Citizen, PennFuture, and the Clean Air Council—argue that the merger could distort retail electricity markets in key states.
Still, Constellation has given no indication it plans reverse course.
CEG stock's price keeps Wall Street interested
Despite falling more than 40% from its January peak, Wall Street remains bullish on CEG stock. Many analysts see the selloff as disconnected from reality (or fundamentals).
In 2024, Constellation more than doubled its GAAP net income to $11.89 per share, beating guidance for the second straight year.
The company returned $1 billion to shareholders through buybacks and has repurchased $2 billion in stock since 2023, with another $1 billion still authorized.
Management expects full-year 2025 earnings to land between $8.90 and $9.60 per share.
Analysts are taking note. Moody’s upgraded Constellation’s credit rating to Baa1 in February, following a string of similar upgrades from S&P since 2022.
Citi maintains a $232 price target on the stock, implying a 12% upside from current levels, and argues that CEG remains undervalued given the strength of its core nuclear business.
The Calpine deal may be a gamble, but Wall Street believes Constellation’s long-term outlook remains intact — at least for now.
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