BofA Downgrades Southern Company, Sees Little Upside From Solar

There are concerns around how much of Georgia Power’s Integrated Resource Plan (IRP) that Southern Co SO can win versus unrelated third parties, according to BofA Securities.

The Southern Co Analyst: Julien Dumoulin-Smith downgraded Southern Co. from Buy to Neutral and reduced the price target from $75 to $71.

The Southern Co Thesis: While the IRP’s more than 7 gigawatts of renewables and storage additions through 2035 sounds exciting, “we are cautious on the percentage of the 6GW of renewables that Georgia Power can own or Southern Power can win vs unrelated third parties,” Dumoulin-Smith said in the downgrade note.

He added that the “disappointing Vogtle ITAAC update” showed Southern Co. tracking short of the guidance management shared during the third-quarter earnings call.

“An acceleration of progress is needed to reach May fuel load,” which indicates that the “fuel load will be delayed or more work will have to be re-sequenced to take place during fuel load which adds risks of erroneous work,” the analyst wrote.

“Therefore, we now still somewhat conservatively embed an incremental 3-month delay beyond guidance which lowers our FY22 EPS by -2c and FY23 EPS by -5c,” he added.

SO Price Action: Shares of Southern Co. were down 1.46% at $67.69 Monday morning.