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Southern Company's Struggle: An Investor's Pespective

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Part 7
Southern Company's Struggle: An Investor's Pespective PART 7 OF 7

Behind Southern Company’s Price Targets Now

Southern Company’s price targets

The consensus Wall Street analyst price target for Southern Company (SO) is $50.71. Its current market price is $49.69, implying a rise of 2.0% over the next year.

Of the 21 analysts tracking Southern Company, one recommends a “buy,” while one recommends a “strong buy,” and 13 recommend a “hold.” Southern Company had four “sell” and two “strong sell” recommendations as of April 7, 2017.

Behind Southern Company&#8217;s Price Targets Now

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Among peers (XLU), the consensus Wall Street analyst price target for Duke Energy (DUK) is $80.89. Its current market price is $82.26, implying a fall of nearly 2.0% over the next year.

Renewables giant NextEra Energy (NEE) has a price target of $137.67, which implies an estimated upside of ~7.0% over the next year, based on its current market price of $128.93.

Southern Company’s outlook

Southern Company’s stock performance has suffered severely in the past few months due to construction delays at its Kemper County plant in Mississippi and its Vogtle nuclear plant in Georgia. Rating agency Moody’s has changed SO subsidiary Georgia Power’s outlook from stable to negative due to concerns over the Vogtle plant delays and the uncertain future of Westinghouse.

Notably, Moody’s also downgraded Mississippi Power, another major subsidiary of SO, last month, with a negative outlook, though it has reiterated SO’s stable outlook.

Georgia Power, the largest subsidiary of SO, contributed nearly half of the parent company’s earnings in 2016. Rating agencies have not cut SO’s rating or outlook yet, but if they do, the company may have to pay higher interest rates on its debt issuances going forward.

For more on Southern Company and the industry, check out Market Realist’s series These S&P 500 Utilities Offer Big Upsides after the Rate Hike.

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