Southern raised at KeyBanc as Vogtle startup makes it a 'premium utility again'
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Southern Co. (NYSE:SO) is upgraded Thursday to Overweight from Sector Weight with a $70 price target at KeyBanc, which said the completion of the Vogtle 3 nuclear reactor in Georgia should make it "a premium utility again," but shares -0.9% as the broader utility sector (XLU) is hammered again.
The startup of Vogtle 3 "should bring a significant relief to investors who watched the plant's challenging construction process over the last decade," KeyBanc analyst Sophie Karp wrote.
But Karp downgraded Dominion Energy (NYSE:D) and Exelon (NASDAQ:EXC) to Sector Weight from Overweight, "driven by our cautious top-down view on the group in general," viewing Dominion as a utility with "above average potential that, however, so far has not been realized," and seeing Exelon as unlikely to benefit from the Inflation Reduction Act.
Karp sees the recent selloff in utilities marking "the beginning of the end of utes' outperformance in this cycle," but she said she is turning more positive on renewables, upgrading First Solar (FSLR) to Overweight as "the most direct beneficiary" of the Inflation Reduction Act.
The analyst believes Enphase Energy (ENPH) is "best positioned to grow and execute through near-term headwinds, given its global presence and dominant market share," also liking Sunnova's (NOVA) attractive growth rate and valuation.
Southern (SO) shares are "still too expensive to hold through a recession," JR Research writes in an analysis posted recently on Seeking Alpha.