American Electric Power cut at BMO as further improved execution could take time

[High Voltage Electric Power Lines At Sunset]
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American Electric Power (AEP [https://seekingalpha.com/symbol/AEP]) -0.4% in Thursday's trading as BMO Capital downgraded shares to Market Perform from Outperform with a $126 price target, seeing further multiple expansion tied primarily to execution which could take time, and as such it moves to the sideline.

Over the last year, AEP (AEP [https://seekingalpha.com/symbol/AEP]) management has successfully repositioned the company to leverage its scale/footprint and transmission expertise to gain exposure to the rapid growth in power demand, which has driven the re-rating in the stock moving from a 10%-12% relative discount to a low single-digit premium on 2027-28 earnings estimates, according to BMO's James Thalacker.

While Q3 adjusted earnings [https://seekingalpha.com/news/4510082-american-electric-power-reports-mixed-q3-results-reaffirms-fy25-outlook] of $1.80/share were in line with expectations, management raised its long-term growth expectations to 7%-9% for 2026-30, supported by a $72 billion capital plan driving a 10% rate base CAGR through 2030; while investors had generally expected a positive capital update given management previewed at least a $70 billion capex plan with Q2 results, the higher growth rate took many by surprise, the analyst said.

"Given its improving credit profile, manageable equity needs, and improving regulated ROE profile, we see AEP has substantially re-rated and we see additional multiple expansion tied to
execution requires patience," Thalacker wrote.

MORE ON AMERICAN ELECTRIC POWER

* American Electric Power Q3 2025 Earnings Call Presentation [https://seekingalpha.com/article/4834886-american-electric-power-company-inc-2025-q3-results-earnings-call-presentation]
* American Electric Power Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4834857-american-electric-power-company-inc-aep-q3-2025-earnings-call-transcript]
* American Electric Power: This Utility Is Anything But Boring [https://seekingalpha.com/article/4816404-american-electric-power-this-utility-is-anything-but-boring]