Jefferies has adjusted its price objective for Southern Co. shares (SO) upward to $102 from $99 while retaining a Hold recommendation. The firm pointed to management's forecast for average annual earnings per share growth of 8% through 2030, a trajectory Jefferies says is underpinned by a planned $81 billion in capital expenditures and an expected 9% compound annual growth rate in the company's rate base.
Southern Co. currently trades at a price-to-earnings ratio of 24.27 and carries a market valuation of $106.5 billion. Separate analysis indicates the stock may be trading above its fair value and appears among companies classified as most overvalued on that measure.
Management has already addressed $9 billion of an $11 billion equity requirement identified for the financing of its investment program. The company reported 10.6% revenue growth over the last twelve months and pays a dividend yield of 3.14%, having increased its dividend for 24 consecutive years.
For 2028, Southern Co. has given a guidance range of $5.25 to $5.45 per share. The firm's project pipeline exceeds 75 gigawatts, reflecting a sizable development workload that will drive capital deployment and require sustained funding and regulatory engagement.
Jefferies flagged several near-term developments that weigh on the risk outlook. The analyst noted that near-term load growth moderated compared with the prior quarter. In addition, the departure of Pridemore and the upcoming Public Service Commission elections in November 2026 introduce political and regulatory uncertainty. Jefferies said the stock's premium valuation effectively requires greater political clarity than currently exists.
Southern Co. recently reported fourth-quarter 2025 results that offered a mixed picture. The company posted earnings per share of $0.55, below the consensus expectation of $0.57, representing a 3.51% earnings miss. Revenues for the quarter rose to $6.98 billion, beating forecasts by 9.06%.
Alongside its near-term results, Southern Company raised its long-term EPS growth target to 8% for the 2026-2030 period, up from a prior range of 5% to 7%. That upward revision accompanies the stated 2028 EPS guidance of $5.25 to $5.45.
Market reaction among other sell-side firms has been constructive. Mizuho upgraded Southern Co. to Outperform from Neutral and set a price objective of $104, citing what it called an attractive valuation. BMO Capital similarly raised its price target to $103 while maintaining an Outperform rating, signaling increased confidence in the company’s growth trajectory.
Given the balance between a sizable capital program, a raised long-term EPS target, and outstanding regulatory questions with political implications, investors monitoring Southern Co. will be weighing funding progress, execution of projects in the 75+ gigawatt pipeline, and developments around regulatory clarity as key determinants of the company’s relative valuation going forward.