AEP Stock Forecast & Price Target

American Electric Power's strong financial outlook is supported by significant customer agreements, having secured 24GW of new load by 2030, reflecting robust demand particularly from commercial and industrial (C&I) customers, including data centers. The utility anticipates an increase in its capital expenditure plan, projecting a boost to a total of $70 billion, indicative of its commitment to expanding infrastructure to meet growing demand. Furthermore, estimates for earnings per share growth have been revised upward to approximately 7.25%, surpassing previous expectations and highlighting AEP's favorable long-term financial trajectory.

American Electric Power faces considerable risks related to environmental regulations that could necessitate accelerated coal retirements, leading to unplanned capital expenditures and higher replacement costs if alternative generation projects encounter delays or budget overruns. The utility's financial position is further exacerbated by its trailing twelve-month (TTM) funds from operations (FFO) to debt ratio, which stands at 13.2%, falling short of the target range of 14%-15%, indicating potential stress in financial flexibility. Additionally, rising interest rates and tighter credit markets pose financing risks, alongside uncertainties regarding customer demand and competitive dynamics, all of which could adversely impact the company’s revenues and earnings projections.