Stock forecast for Southern Company: Is the financial sector optimistic or pessimistic?
The Southern Company (SO), a leading U.S. energy utility, has seen its stock performance mixed in recent quarters, with a moderate buy consensus from analysts.
In a recent report, Scotiabank analyst Andrew Weisel reaffirmed a "Sector Outperform" rating and a $98 price target on Southern. This price target represents a premium of 3% from the current market prices.
The consensus rating is based on eight "Strong Buy" ratings, one "Moderate Buy," 10 "Holds," and one "Strong Sell." This shows a shift in bullishness compared to three months ago, when seven analysts gave the stock a "Strong Buy."
Southern Company’s Q2 revenue rose 8% year-over-year to $7 billion, but the adjusted EPS came in at $0.92, slightly below the consensus estimate of $0.93.
Despite this, analysts remain optimistic about the company's future. The average price target is around $97.25 to $98, implying about a 3%-4% upside from current levels, with a high target near $104 suggesting up to 10% potential gains.
This optimism is supported by the company's consistent EPS growth and low-risk profile, as highlighted by Weisel. For the fiscal year ending in December 2025, analysts expect The Southern Company's EPS to grow 5.7% year-over-year to $4.28.
From a technical and trading perspective, Southern Company stock currently has buy signals from short- and long-term moving averages, with underlying support levels near $91.51 and $94.79. However, some recent sell signals were triggered from pivot points, suggesting an ongoing short-term correction risk until a new bottom forms.
A rare "Golden Star Signal" was observed in June 2025, indicating potential for strong gains, but recent volume-price divergence and sell signals call for careful monitoring.
However, some fair value estimates put SO’s worth somewhat below the current price, indicating potential downside risks from rising operating costs and other factors.
The Southern Company's stock has underperformed the Utilities Select Sector SPDR Fund's 19.6% return over the past 52 weeks, but shares have climbed 9% during the same period, while the broader S&P 500 Index has rallied 21.5%. On a YTD basis, shares of The Southern Company have risen 14.7%, outpacing the SPX's 7.1% rise.
The Southern Company, which provides electricity and natural gas to over 9 million customers across the southeastern United States, has a market cap of $105.6 billion. The company released its Q2 earnings on Jul. 31, and its shares dropped marginally following the release.
The Southern Company's earnings surprise history is mixed, with three beats and one miss in the last four quarters. For more information, please view the Disclosure Policy on the website.
Investors should watch key support levels and earnings revisions closely, as near-term price action may face pressure due to technical corrections and volume divergence.
- Given the optimistic outlook of analysts, who have priced Southern Company's stock with an average target around $97.25 to $98, investors might consider investing in the company's stocks for potential gains of about 3%-4%.
- Despite the Southern Company's stock underperforming the Utilities Select Sector SPDR Fund's return over the past 52 weeks, some analysts, like Scotiabank's Andrew Weisel, still see value in Southern Company's stocks due to its consistent EPS growth and low-risk profile, particularly for the fiscal year ending in December 2025.
