Southern Company (SO) Price Target Raised by TD Cowen on Financing and Demand Outlook
The Southern Company (NYSE:SO) is included among the 14 Stocks on the Verge of Becoming Dividend Aristocrats.
On March 6, Shelby Tucker of TD Cowen raised the firm’s price objective on The Southern Company (NYSE:SO) to $112 from $108. It maintained a Buy rating on the shares. The firm said the company’s loan guarantee from the U.S. Department of Energy represents both a financing win and political support for its strategy that “growth drives affordability.” According to the analyst, the company argues that large increases in electricity demand can benefit customers. Minimum bill contracts help cover system costs and ease pressure on electricity rates. With affordability concerns appearing less central for now, the firm believes the company may deserve a higher valuation premium.
On February 26, Reuters reported that the U.S. Department of Energy offered a $26.54 billion loan to subsidiaries of Southern Company to improve power grid reliability. The financing marks the largest loan ever issued by the department’s loan office. The funding is expected to help customers in Georgia and Alabama save more than $7 billion. Part of those savings comes from the company’s commitment to freeze electricity rates for three years.
The loans to Georgia Power and Alabama Power will support more than 16 gigawatts of new and upgraded power capacity. Projects tied to the funding include natural gas generation, upgrades at nuclear facilities, modernization of hydropower assets, energy storage development, and more than 1,300 miles of transmission improvements.
The Southern Company (NYSE:SO) is an energy provider with several operating subsidiaries. The company owns three traditional electric utilities, along with Southern Power Company and Southern Company Gas. These utilities provide electricity to retail customers across the Southeast and also serve wholesale customers in the region.
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