- Wolfe Research boosted its rating on Southern Company ( NYSE: SO ) Monday citing valuation and a strong balance sheet.
- Wolfe upgraded SO to Outperform from Peer Perform with a price target of $76 per share.
- The stock rose 0.9% in premarket trading.
- "We are upgrading SO to Outperform because we see the stock reaching a premium multiple in 2023, as investors look for names with a strong B/S and regulatory certainty," the equity research team said. "A major milestone in 2023 is the commercial operation of U-3 – the first of two new nuclear units at Vogtle – and potentially U-4 by YE23.
- "SO faces headwinds from higher interest rates and carrying costs on Vogtle overruns, likely resulting in 2023 guidance being flattish and 2024 guidance in the lower third of the current $4.00-4.30 range," they added. "But we expect SO to grow EPS 5-7% off 2024, achieve a top tier FFO/Debt (>16%), and avoid major rate cases until 2H25. SO stock trades at a half-turn discount to peers."
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Southern Company snags upgrade from Wolfe to top rating