Hold Rating Maintained for Southern Co Amid Regulatory and Financial Uncertainties

Analyst Ross Fowler of Bank of America Securities maintained a Hold rating on Southern Co (SO – Research Report), retaining the price target of $96.00.

Ross Fowler has given his Hold rating due to a combination of factors surrounding Southern Co’s current financial and regulatory situation. The company, through its subsidiary Georgia Power, has reached a settlement agreement with the Georgia Public Service Commission (PSC) staff, but this agreement still requires PSC approval. The uncertainty surrounding this approval process contributes to the cautious outlook.
Additionally, the settlement would extend the current rate plan through 2028 without base rate adjustments in the later years, except for storm damages. While the equity ratio and return on equity (ROE) remain stable, the potential for earnings outside the ROE range to be subject to sharing or interim cost recovery adds complexity to the financial outlook. These elements, combined with the current market valuation and price objective, support the decision to maintain a Hold rating.