Investing.com -- Bank of America upgraded American Electric Power Company Inc (NASDAQ:AEP) to "Buy" from "Underperform" on a brighter financial outlook and progress in its strategic transition. The brokerage also raised its price objective for the utility giant to $104 from $98.
The upgrade follows AEP’s announcement of a $2.8 billion sale of a 19.9% minority stake in its transmission holding company assets and the appointment of Trevor Mihalik as Chief Financial Officer.
BofA analysts view the asset sale as a move to replace external equity market needs, reducing near-term equity issuance requirements to a manageable $2 billion in the second half of 2025.
“We assume the $2.8bn is directly used to reduce debt near term and we reduce our equity need assumptions to $2bn in the form of external issuance, model block equity via a forward hitting shares in 2026, leaving only $100mn of internal dividend reinvestment plans for ongoing equity through the 2029 forecast period,” analyst added.
Bank of America expects AEP to achieve 6%-8% consolidated EPS growth, aided by balance sheet improvements, including a projected 15% FFO-to-debt ratio. These factors, alongside potential upside to EPS in later years, make AEP an attractive investment at current levels.