Barclays Downgrades American Electric Power (AEP) to Equalweight, 'Valuation Is Extended'

Barclays analyst Nicholas Campanella downgraded American Electric Power (NASDAQ: AEP) from Overweight to Equalweight with a price target of $83.00 (from $84.00).

The analyst comments "Valuation Is Extended As the CEO Search Process Kicks Off: Downgrade to EW: Post 4Q results, we are downgrading AEP shares to EW from OW. AEPs 4Q print brought a reaffirmation of the core aspects of the LT financial plan, including the 6-7% LT EPS CAGR, 14-15% FFO/debt and FY24 EPS guidance ($5.53-5.73), but also a new CEO as Julie Sloat has departed and interim CEO Ben Fowke has stepped in while the board searches for a permanent successor. Since September 2023, AEP has outperformed peers by 10.35% and now trades nearly in-line vs. large cap electric companies in our coverage universe. AEP has a mix of premium / discount assets, and an average growth rate which has sustained some notable regulatory headwinds in '23. We see some fundamental deterioration in FY23 results in addition to this with FFO/debt somewhat weak at 13.2%, FY24 sales vols -20bps from EEI, and some shifting in timing of renewable projects which we continue to monitor. We further see the CEO search adding some execution risk to these stated growth metrics with AEP's stock now trading closer to the peer group. Optimism around activist involvement and the CEO change is now more than reflected in the shares current multiple."

For an analyst ratings summary and ratings history on American Electric Power click here. For more ratings news on American Electric Power click here.

Shares of American Electric Power closed at $84.07 yesterday.

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