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Investing.com -- Jefferies upgraded Southern Company (NYSE:SO) to Buy from Hold, citing stronger-than-expected long-term earnings growth potential driven by upcoming project wins and reduced regulatory risk.
The brokerage sees Southern poised to secure over 70% of Georgia Power’s 8.5-gigawatt renewable request-for-proposal (RFP), translating into about $12.9 billion of additional capital expenditure through 2029.
That would lift the utility’s earnings per share growth to 7.2% through 2029, and up to 7.9% through 2035, above the current Street estimate of 6.6%.
Jefferies said the company’s ability to avoid a rate case in Georgia for three years removes a key overhang and adds clarity to Southern’s financial trajectory.
Combined with a rate base growth forecast of nearly 9% through the end of the decade, well above peers averaging 6-7%, Southern stands out as one of the best-positioned names in the sector.
The firm expects Southern’s next phase of growth to kick in from 2027, helped by earnings from new construction, tax credits, and returns on previous investments.
Jefferies said while near-term guidance may remain unchanged, investors could see fundamental earnings reset as the company transitions to this higher-growth period.
Southern currently trades at 18.1 times 2027 earnings, a 15% premium to peers, which Jefferies sees as justified given its scale, liquidity, and growth profile. The firm maintained a positive view despite potential short-term uncertainty around updates expected in July.
Jefferies added that further upside may come from new RFPs between 2032 and 2035 tied to coal retirements, supporting sustained investment and rate base growth into the next decade.