Southern Company: Why Vogtle’s Rate Recovery Might Be Complex
The fate of Vogtle nuclear power plant will remain uncertain for the next six months until state regulators review Southern Company’s (SO) proposal to continue with the project. The Vogtle project has four owners, and Southern Company owns nearly 46% of the project. The project’s rate recovery might be too complicated, largely due to the involvement of multiple owners and their probable unwillingness to pass on the rate increases to their customers.
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According to the Wall Street analyst consensus, Southern Company (SO) stock has a mean price target of $50.94, which suggests a potential upside of 3.6% going forward. It is currently trading at $49.16. Mizuho Securities recently upgraded Southern Company stock from “neutral” to “buy.” It has given a price target of $53.0.
On September 6, 2017, among the 19 analysts tracking Southern Company, 11 recommend it as a “hold,” while one analyst recommends “strong buy,” and four recommend a “buy.” One analyst recommends the stock as a “buy” and two rate it a “strong sell.” We can see in the graph above that more analysts have turned optimistic on Southern Company in the last six months.
Peers’ price target
Florida-based NextEra Energy (NEE), the largest utility by market capitalization, has a mean price target of $154.08, which implies a possible gain of 2.5% from its current levels of $150.26. NEE has already rallied 25% so far this year.
Duke Energy (DUK) could see a potential fall of nearly 2% from its current levels of $87.41. It has a mean price target of $85.93.
If you wish to read about the top-yielding S&P 500 utilities (XLU), you can read Which Utility Stock Is Best among the Top-Yielding SPX Utilities?