Balanced Outlook: Southern Co’s Growth Initiatives Versus Regulatory Challenges Justify Hold Rating

Bank of America Securities analyst Ross Fowler has maintained their neutral stance on SO stock, giving a Hold rating yesterday.

Ross Fowler has given his Hold rating due to a combination of factors surrounding Southern Co’s recent financial performance and future outlook. Southern Co reported earnings per share (EPS) for the fiscal year 2024 that were in line with consensus estimates and at the top end of company guidance, showing a positive trend. However, while the earnings improvement was largely driven by regulated utilities, the company faces challenges such as higher operating, maintenance, and interest expenses.
Despite Southern Co’s initiation of a positive 2025 EPS guidance and an increase in its capital investment plan, Fowler notes that the company’s financial performance is counterbalanced by its regulatory calendar, particularly the pending decisions on the Georgia Power Integrated Resource Plan and the General Rate Case. The potential for increased rate base growth is contingent on these factors, leading to a cautious outlook. Therefore, a Hold rating is justified as Southern Co’s prospects appear balanced between positive growth initiatives and regulatory uncertainties.

In another report released yesterday, Morgan Stanley also maintained a Hold rating on the stock with a $88.00 price target.

Based on the recent corporate insider activity of 61 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SO in relation to earlier this year.