Quick Take: CEG - Google's Nuclear Deal in PJM

Constellation announced a new nuclear transaction this morning with Google - 890 MW of nuclear uprates signed in a 20-year power purchase agreement. Incrementally, they signed a 2.7 GW, 15-year agreement covering existing generation. At a time when new builds are 3-5 years out, and PJM is constrained in capacity, CEG has an existing, high quality fleet that it's converting into long duration earnings. The timing reflects an addition and reaction to PJM's "BYOP - Bring Your Own Power" proposal providing possible relief to the electricity affordability debate. We expect to see more such announcements as bilateral deals may be the speediest way for data centers and hyperscalers to expand their supply of power. Bottom line: a ~3.6GW announcement combining new growth with ~3x existing supply, shows revenue visibility for the operating fleet. Constellation has an irreplaceable physical moat with the largest nuclear fleet in the U.S. We are Outperform on CEG with a PT of $296.