Southern Co. ( NYSE: SO ) slips slightly in Monday's trading as Bank of America downgraded shares to Underperform from Neutral with a $59 price target, cut from $63, after relative outperformance has led to shares that are now expensive at a premium to peers.
Following "modest success" in advancing construction of the delayed Vogtle nuclear project in Georgia, BofA's Julien Dumoulin-Smith expects attention to pivot to back to the fundamentals where Southern ( SO ) offers a below average 5.8% growth rate, which is expected to drop to 4% in 2026.
"Challenging electric affordability [has] reduced growth, thus we do not believe Southern can return to its historical premium," Dumoulin-Smith said, adding that he does not expect an unfavorable Georgia rate case outcome but staff's proposed 51% equity ratio is a risk.
Taking a different view, Southern ( SO ) recently was upgraded to Overweight at KeyBanc, which said the completion of the Vogtle 3 reactor should make it "a premium utility again ."
For further details see:
Southern cut to Sell equivalent at BofA, citing below average growth rate