Citi is warning that Constellation Energy could face execution risks in restarting the Three Mile Island nuclear plant , initiating coverage of the high-flying power stock with caution. The bank initiated a neutral rating with a price target of $284 per share for Constellation, implying modest upside of 4.5% over Monday's close of $271.74. Constellation's stock has more than doubled this year and is up nearly 40% over the past month as Wall Street bets that the company's nuclear fleet is well positioned to serve power demand from the tech sector's data center expansion. CEG YTD line Constellation Energy stock, year-to-date performance. But Citi analyst Ryan Levine warned that Constellation will likely face cost overruns and delays in restarting Three Mile Island. Constellation has set a 2028 start date and will sell the power to Microsoft to help offset emissions from its data centers through a 20-year contract. "We think the permitting timeline could slip to the right given [a] complicated and challenging regulatory process," Levine told clients in a Monday note. Every month that the project is delayed could shave 9 cents off Constellation's stock, according to Levine. Every $1 million of recurring cost overruns could hit the stock by 4 cents, he said. Levine also warned that Constellation could face challenges inking deals to directly power data centers with its nuclear reactors, the largest such fleet in the country. About 35% of Constellation's current stock price assumes power sales from its nuclear fleet to the tech companies scaling up data centers. "Our caution is based on local politics, residential bill impact, ancillary services, backup generation needs, and reliability," Levine said.
