SO: Analyzing Southern Company’s Key Indicators

Southern Company (SO) stock has continued to trade close to all-time highs. The stock has gained more than 42% this year, notably outperforming peers. Utilities have soared almost 20% in the same period.

Mizuho cuts SO’s target

Mizuho Securities cut Southern Company’s target price from $62 to $59.50 on November 26. After the stock’s steep rally, analysts expect flat-to-negative movement from SO stock for the next year. Their mean 12-month target price of $61.30 implies a 1.6% downside based on its current price of $62.30. Of the 18 analysts covering SO stock, 12 suggest “hold,” four suggest “sell,” one suggests “buy,” and one suggests “strong sell.”

Plant Vogtle update and Q3 earnings

According to the Georgia Public Service Commission, Southern Company’s Vogtle project schedule looks challenging. The delays might also result in cost overruns, which could concern the utility’s investors. Also, Southern’s inflated valuation could hinder its rally going ahead. To learn more, read Southern Company: Clues Suggest an End to Its Rally.

In the third quarter, Southern’s EPS rose more than 17% year-over-year to $1.34. The utility’s EPS growth has been flattish in the last few years. However, utility investors may not mind that stagnancy—SO currently yields 4%, more than peers.

Southern Company stock: Technical indicators

Southern Company stock is currently trading 1% and 11% above its 50- and 200-day simple moving averages, respectively. The stock crossed above these key support levels early this year, and has been strong since then. Its 50-day average around $61.70 will likely act as short-term support.

Southern’s RSI (relative strength index) score was 53 yesterday, indicating the stock is neither oversold nor in overbought.

Short interest in Southern stock has risen by 7% recently, with its shorted shares rising from 18.3 million on October 31 to 19.6 million on November 15. Short interest represents the number of shares that have been sold but not squared off yet. An increase in a stock’s short interest suggests more investors expect its price to fall.

Southern stock has outperformed utility giants Dominion Energy (D) and Duke Energy (DUK) this year, which are up 16% and 2%, respectively. Duke stock has been weak recently because of the regulated utility’s Q3 earnings miss and share dilution. To learn more, read Why Duke Energy Has Been on Brokerages’ Radar.

Dominion Energy stock is currently trading close to a 52-week high, and UBS has raised its target price from $89 to $96. Collectively, SO, D, and DUK form approximately 23% of the Utilities Select Sector SPDR ETF (XLU).