American Electric Power (AEP) Downgraded To 'Hold' By Deutsche Bank
Friday, January 27, 2022 1:21 PM

Deutsche Bank (DB) downgraded its rating on American Electric Power Co. Inc.(NYSE:AEP) to "Hold" from "Buy", saying the company now appears fairly valued on earnings outlook after recent out-performance.

Jonathan Arnold, an analyst at DB, believes AEP should continue to trade at a discount to peers given uncertainty in the earnings outlook relative to regulated peers.

"Meanwhile, we learned this week that PUCO has introduced a new layer of uncertainty in Ohio with a recent order clarifying the Electric Security Plan (ESP) decision," Arnold wrote in a note. "We note that AEP has indicated plans to file a petition for rehearing of the order, but it seems relatively unlikely that PUCO will rule on that petition ahead of AEP’s February 10 analyst meeting."

In addition, Arnold said he now sees new downside risk to his estimates from the PUCO order, which could allow for more customer switching in 2012-14. He slashed price target on the stock to $41 from $42.

The stock fell 3.1 percent to trade at $40.00 on Friday.