UPDATE: Wells Fargo Upgrades Southern Co. (SO) to Overweight

(updating comment)

Wells Fargo analyst Neil Kalton upgraded Southern Co. (NYSE: SO) from Equal Weight to Overweight with a price target of $72.00.

The analyst comments "We upgrade SO to Overweight from Equal Weight and increase our forward price target to $72/sh from $63/sh. Since bottoming out in Aug/Sept, shares of SO have clawed back and are now underperforming the S&P Utilities by 300 bps YTD (vs. 900 bps in Aug/Sept). That being said, we think SO could be in the early stages of a substantial valuation re-rating; albeit not without risk. In our view, SO is on the cusp of recapturing a position amongst the anointed utilities in the sector. Post the new nuclear development (NND), SO should share many of the appealing characteristics of the perceived “high quality” regulated electric peer group (strong growth + constructive regulation) – in this vein, we increase our 22-24E EPS to/from $3.60/$3.53, $3.95/$3.82 & $4.25/$4.05 driven by higher non-nuclear capex assumptions. SO currently trades at 20% P/E discounts to the “high quality” group, which we view as the aspirational upside case as the company progresses and ultimately moves beyond the NND in (likely) late ’22."

For an analyst ratings summary and ratings history on Southern Co. click here. For more ratings news on Southern Co. click here.

Shares of Southern Co. closed at $59.85 yesterday.

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