BMO Capital Boosts American Electric Power Price Target to $121, Maintains Outperform Rating.

BMO Capital has increased its price target for American Electric Power Company (AEP) to $121, maintaining an Outperform rating. The company reported a strong quarterly performance, surpassing expectations, and anticipates ending 2025 with earnings per share between $5.75 and $5.95. AEP is a large regulated utility in the US, providing electricity to over 5 million customers across 11 states, with a market capitalization of approximately $60.39 billion.

BMO Capital has increased its price target for American Electric Power Company (AEP) to $121.00, maintaining an Outperform rating. The utility giant, currently valued at approximately $60.5 billion, has seen its stock surge 25% year-to-date, trading near its 52-week high of $114.23. The upgrade comes after the company reported strong quarterly earnings, exceeding both BMO’s estimate of $1.25 per share and the consensus forecast of $1.27 per share.

American Electric Power (AEP) reported quarterly earnings of $1.43 per share, beating expectations and including tax-timing benefits. The company also previewed its upcoming third-quarter five-year capital plan, totaling approximately $70 billion, a $16 billion increase in capital expenditures. This expansion will be funded by 30-40% growth equity, with potential use of hybrid securities and growing operating cash flow.

BMO Capital noted that while the capital increase announcement came earlier than expected, investor focus remains primarily on the ultimate funding mixture for these expenditures. The company expects full-year 2025 results to finish in the upper half of its guidance range of $5.75-$5.95 per share.

In other recent news, American Electric Power Company Inc (AEP) reported its second-quarter earnings for 2025, surpassing expectations. The company achieved an earnings per share (EPS) of $1.43, significantly beating the forecasted $1.22. Revenue also exceeded projections, reaching $5.09 billion compared to the anticipated $4.9 billion. These results highlight AEP’s strong financial performance in the recent quarter.

Following these results, AEP’s stock experienced a 3.89% increase in pre-market trading, reflecting investor optimism. According to InvestingPro data, AEP currently trades at a P/E ratio of 21.8x and maintains a market capitalization of $60.7 billion, suggesting the stock is currently overvalued compared to its Fair Value.

Key Takeaways:
- AEP’s Q2 2025 EPS of $1.43 exceeded forecasts by 17.21%.
- Revenue reached $5.09 billion, surpassing expectations by 3.88%.
- Pre-market stock price rose by 3.89% to $111.
- Strong operational performance in vertically integrated utilities and transmission sectors.

Market Reaction:
Following the earnings announcement, AEP’s stock rose by 3.89% in pre-market trading, reaching $111. This increase reflects positive investor sentiment driven by the company’s strong financial performance and optimistic outlook.

Outlook & Guidance:
AEP has revised its capital plan, increasing it from $54 billion to $70 billion, with a focus on transmission, generation, and distribution. The company aims to maintain a long-term earnings growth rate of 6-8% and expects to announce a detailed five-year capital plan in the third quarter.

Executive Commentary:
CEO Bill Furman noted, "Demand for power is growing at a pace I have not seen in my 45-year energy career," highlighting the unprecedented load growth and demand for AEP’s services. CFO Trevor Mihalik added, "We continue to see opportunity to continue to invest. We’re going to be disciplined," emphasizing the company’s strategic approach to capital allocation.

Risks and Challenges:
- Regulatory changes: Potential impacts from evolving energy policies and regulations.
- Market competition: Increased competition in the energy sector may affect market share.
- Economic conditions: Macroeconomic factors could influence demand for energy services.
- Supply chain disruptions: Potential challenges in sourcing materials for infrastructure projects.
- Technological advancements: Keeping pace with rapid technological changes in the energy industry.

References:
[1] https://za.investing.com/news/analyst-ratings/bmo-capital-raises-american-electric-power-stock-price-target-on-strong-earnings-93CH-3813567
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-aep-q2-2025-beats-forecasts-stock-rises-93CH-4160765