Constellation Energy Stock Soars on Its $26 Billion Buy. Here's Why Wall Street Likes the Deal
Constellation Energy is one of the best S&P 500 stocks Friday after the utility said it will buy Calpine in a cash-and-stock deal valued at $26 billion.


Constellation Energy (CEG) is one of the best S&P 500 stocks Friday, up more than 22% at last check, after the utility company said it will acquire independent power producer Calpine for a net purchase price of $26.6 billion. The merger of the two firms will create the nation's largest clean energy provider.
Constellation said it will use 50 million CEG shares priced at the 20-day volume-weighted average price (VWAP) of approximately $237.98 apiece and $4.5 billion in cash to fund the purchase. It will also assume roughly $12.7 billion of Calpine's net debt.
"This acquisition will help us better serve our customers across America, from families to businesses and utilities," said Constellation CEO Joe Dominguez in a statement. "By combining Constellation's unmatched expertise in zero-emission nuclear energy with Calpine's industry-leading, best-in-class, low-carbon natural gas and geothermal generation fleets, we will be able to offer the broadest array of energy products and services available in the industry."

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The transaction is expected to immediately begin boosting Constellation's earnings, with the company projecting an increase of more than 20% to EPS in 2026 and adding at least $2 per share to earnings in future years. It's also expected to add more than $2 billion of free cash flow annually.
The transaction is subject to the customary closing conditions, including regulatory approvals from numerous agencies, Constellation said. If all goes as planned, the transaction is expected to close within 12 months.
Is Constellation Energy stock a buy, sell or hold?
The utility stock was one of the top performers of 2024, ending the year up nearly 93% on a total return basis (price change plus dividends) and it remains a top stock pick this year too. Indeed, Wall Street is overwhelmingly bullish on the large-cap stock.
According to S&P Global Market Intelligence, the consensus recommendation among the 18 covering analysts that it tracks is Buy.
However, analysts' price targets may need to be adjusted following the news of the acquisition. At last check, the average analyst price target of $279 represents a discount of more than 7% to current levels.
Financial services firm UBS Global Research is one of those with a Buy rating on CEG stock, along with a $289 price target.
After rumors of the deal surfaced earlier this week, UBS Global Research analyst William Appicelli said the deal would position Constellation "for a variety of market conditions and have more volumetric upside as power demand grows, as most expect it will in a meaningful manner."
He added that "the addition of a large gas portfolio opens the door for CEG to be more flexible in meeting future large load demand."
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.
-
Stock Market Today: Stocks Are Mixed Before Liberation Day
Markets look forward to what comes with the reordering of 80-year-old global trade relationships.
By David Dittman Published
-
Stagflation: What It Is and Why Retirees Should Care
Stagflation — the economic bogeyman of the 1970's — may return to the US. Here's what it could mean to your retirement.
By Donna Fuscaldo Published
-
Stock Market Today: It's the Old Up-Down Again on Liberation Day
Markets look forward to what comes with the reordering of 80-year-old global trade relationships.
By David Dittman Published
-
Can a New Manager Cure Vanguard Health Care Fund?
Vanguard Health Care Fund has assets of $40.5 billion but has been ailing in recent years. With a new manager in charge, what's the prognosis?
By Nellie S. Huang Published
-
What You Don't Know About Annuities Can Hurt You
Lack of awareness leads many to overlook these potent financial tools, and with the possibility of running out of money in retirement, that could really hurt.
By Ken Nuss Published
-
Three Keys to Logical Investing When Markets Are Volatile
Focusing on these market fundamentals can help investors stay grounded rather than being swayed by emotion or market hysteria.
By Dennis D. Coughlin, CFP, AIF Published
-
Yes, the Markets Are Spooked, But You Don't Have to Be
It's human nature for investors to freak out in a downturn. But with a little discipline, you can overcome the urge to sell and stay focused on long-term goals.
By Jimmy Lee, IAR Published
-
Remembering Bogle: A New Standard for Municipal Investing
Improvements in technology, data, systematic trading and risk analytics have led to more successful municipal indexing.
By Paul Malloy Published
-
Stock Market Today: Stocks Are Mixed Before Liberation Day
Markets are getting into the freewheeling rhythm of a second Trump administration.
By David Dittman Published
-
How to Invest in Sports
If it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
By David Dittman Published