SO - Goldman Sachs dubs Southern Co stock a 'most differentiated fundamental buy idea'

2023-07-03 14:46:53 ET

Southern Co ( NYSE: SO ) shareholders will likely be rewarded for their patience over the next 12 months, says Carly Davenport – a Goldman Sachs analyst.

Southern Co stock should be worth $80

On Monday, Davenport dubbed the gas and electric utility holding company a “top pick” and said its shares could climb to $80 that suggests about a 15% upside from here. The analyst likes Southern Co stock primarily for the limited regulatory risk.

Southern Co is uniquely positioned to provide above average clean energy growth (nuclear) while having below average regulatory risk within its regulated utility.

The Atlanta-headquartered firm is scheduled to report its financial results for the second quarter in the final week of July.

Consensus is for it to earn 75 cents a share versus $1.07 per share a year ago.

Southern Co could benefit from the IRA

Davenport cited Vogtle Units 3 and 4 and said the market was underappreciating the construction of first nuclear power plant in the United States in more than three decades.

The analyst expects also Inflation Reduction Act that includes nuclear production tax credits to help accelerate EPS growth for the New York listed firm through 2027.

On Monday, Goldman Sachs added the second largest U.S. utility firm in terms of customer base to its list of “most differentiated fundamental buy ideas” within U.S. equities as well.

Lastly, Southern Co is a dividend stock that currently pays a yield of close to 4.0%. That makes up for another good reason to have it in your portfolio.

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