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The Southern Company Upgraded to “Buy” at Jefferies; Valuation Call (SO)

By Dividend.com,  May 15, 2012, 09:12:22 AM EDT

Electric utility operator The Southern Company ( SO ) on Tuesday caught a big upgrade from analysts at Jefferies & Co.

The firm said it boosted its rating on SO from "Hold" to "Buy" while lifting its price target from $46 to $50.50. That new target suggests an 11% upside to the stock's Monday closing price of $45.45.

A Jefferies analyst commented, "We are upgrading Southern Company to Buy from Hold based on valuation. The spread between Southern's earned return on equity, the minimum threshold needed to breakeven, is the most favorable of any of the regulated companies in our coverage universe. The combination of a favorable spread with a high level of rate base growth merits a 25% P/E premium to our regulated electric peer group."

The Southern Company shares posted modest gains in premarket trading Tuesday.

The Bottom Line
Shares of The Southern Company ( SO ) have a 4.31% dividend yield, based on last night's closing stock price of $45.45. The stock has technical support in the $42-$44 price area. The stock is trading near all-time highs of $46-$47 a share.

The Southern Company ( SO ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: SO



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