While BMO Capital views the transaction positively, noting it should alleviate two significant concerns regarding the stock—confirmation of the financial plan and balance sheet enhancement—the firm also expects some investor reservation due to the sale of one of American Electric Power (NASDAQ:AEP)'s faster-growing assets.The firm has updated its forecasts to reflect the impact of the transaction. The 2024 EPS estimate remains unchanged at $5.63, aligning closely with InvestingPro's consensus forecast of $5.59.
However, projections for the years 2025 to 2028 have been adjusted. The new EPS estimates for these years are now set at $5.94 (from $5.85), $6.37 (from $6.28), $6.81 (from $6.70), and $7.22 (from $7.10), respectively. These revisions take into account the anticipated positive financial outcomes of the minority interest sale. Notably, InvestingPro's analysis indicates that while AEP has raised its dividend for 15 consecutive years, it currently trades at a high P/E ratio relative to near-term earnings growth.
While BMO Capital views the transaction positively, noting it should alleviate two significant concerns regarding the stock—confirmation of the financial plan and balance sheet enhancement—the firm also expects some investor reservation due to the sale of one of American Electric Power's faster-growing assets.The firm has updated its forecasts to reflect the impact of the transaction.
The 2024 EPS estimate remains unchanged at $5.63, aligning closely with InvestingPro's consensus forecast of $5.59. However, projections for the years 2025 to 2028 have been adjusted. The new EPS estimates for these years are now set at $5.94 (from $5.85), $6.37 (from $6.28), $6.81 (from $6.70), and $7.22 (from $7.10), respectively.
These revisions take into account the anticipated positive financial outcomes of the minority interest sale. Notably, InvestingPro's analysis indicates that while AEP has raised its dividend for 15 consecutive years, it currently trades at a high P/E ratio relative to near-term earnings growth.
While BMO Capital views the transaction positively, noting it should alleviate two significant concerns regarding the stock—confirmation of the financial plan and balance sheet enhancement—the firm also expects some investor reservation due to the sale of one of American Electric Power's faster-growing assets.
The firm has updated its forecasts to reflect the impact of the transaction. The 2024 EPS estimate remains unchanged at $5.63. However, projections for the years 2025 to 2028 have been adjusted. The new EPS estimates for these years are now set at $5.94 (from $5.85), $6.37 (from $6.28), $6.81 (from $6.70), and $7.22 (from $7.10), respectively. These revisions take into account the anticipated positive financial outcomes of the minority interest sale.
In other recent news, American Electric Power (AEP) reported strong third-quarter operating earnings of $1.85 per share, equating to $985 million. The company also revised its 2024 full-year earnings guidance to a range of $5.58 to $5.68 per share and introduced a 2025 operating earnings guidance range of $5.75 to $5.95 per share. AEP's long-term earnings growth rate is projected at 6% to 8%, backed by a $54 billion capital plan for 2025-2029.
In recent developments, AEP announced the appointment of Trevor I. Mihalik as its new executive vice president and chief financial officer. Mihalik, who brings over three decades of experience in the energy sector, will succeed Chuck Zebula, who is transitioning to a senior advisor role to the CEO.
On the analyst front, Scotiabank (TSX:BNS), JPMorgan (NYSE:JPM), and BMO Capital have all revised their outlooks on AEP. Scotiabank and JPMorgan downgraded the company's stock to Sector Perform and Neutral, respectively, adjusting the price target to $102.
BMO Capital initially raised the price target to $108.00, maintaining an Outperform rating. However, following AEP's weaker-than-expected guidance for 2025, BMO Capital revised the price target down to $104.00, while still maintaining the Outperform rating.
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