Goldman Sachs Downgrades American Electric Power (AEP) to Neutral

Goldman Sachs analyst Carly Davenport downgraded American Electric Power (NASDAQ: AEP) from Buy to Neutral with a price target of $147.00.

The analyst comments: “Following recent positive catalysts, such as capital plan increases and data center load growth expectations, we lower American Electric Power (AEP) from Buy to Neutral. Over the last twelve months, AEP shares have risen 28%, outperforming the XLU (11%). We see less upside to valuation with the stock currently trading at a 19.1x P/E multiple on our 2027 EPS estimates, versus our coverage average (ex-CA) of 17.8x. With recent positive developments now largely priced into the multiple at these levels, we believe the risk-reward profile is balanced at this point. Our price target remains unchanged at $147, implying a total return of 13%, compared to the rest of our regulated utilities coverage at 11% on average.

AEP recently increased its five-year capital plan to $78 bn (up from $72 bn, which was previously raised from $54 bn). The company also identified an incremental pipeline of over $10 bn in additional projects, including the Piketon transmission project, the Wyoming Bloom Fuel Cell initiative, and additional generation opportunities that are not yet in the base plan. However, we highlight that there is more execution and regulatory risk around these projects (Bloom/Piketon), as these opportunities are still hinging on final regulatory approvals, where management had guided to clarity on the incremental Bloom capex to be included in the base plan by the end of 2Q26, but this has yet to materialize which we believe increases execution and timing risk. While these opportunities support robust rate base growth, we expect the rate of capital plan increases to decelerate from here, removing a key near-term catalyst that has historically driven the stock higher.”

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 $132.50 yesterday.

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