TLDR
- AEP shares fell sharply after UBS lowered its price target and kept a Sell rating.
- Conflicting analyst views highlight tension between valuation risks and growth forecasts.
- AI-driven data center demand remains a key factor in AEP’s long-term outlook.
- Siebert Williams sees strong EPS growth supported by regulated asset expansion.
- Despite the dip, AEP remains up strongly year-to-date amid mixed sentiment.
American Electric Power Company, Inc. (AEP) fell 2.56% intraday to $112.85 by 11:55 AM EST, losing $2.96 per share.
American Electric Power Company, Inc., AEP
The stock experienced a sharp selloff mid-morning and has struggled to stabilize since. This sudden drop follows a revised outlook from UBS that trimmed its price target and maintained a bearish stance.
UBS Lowers Price Target Despite AEP’s Growth Forecast
UBS reaffirmed its Sell rating on AEP while cutting the price target from $114 to $107. This move triggered a negative market response despite broader optimism surrounding utility stocks with AI-linked growth prospects. UBS remains unconvinced by the earnings expansion narrative tied to digital infrastructure trends.
Morgan Stanley adjusted its own target to $120 from $128 and kept an Overweight rating. The firm highlighted upside potential from data center growth and higher electricity demand by 2026. However, UBS’s stance carried more weight in early trading, pulling the stock lower.
The downgrade reflects concern over valuation, regulatory challenges, and slowing momentum in key business segments. UBS does not see near-term catalysts strong enough to offset these concerns. As a result, sentiment around AEP turned sharply negative.
Siebert Williams Initiates Coverage with Bullish Projections
On December 18, 2025, Siebert Williams began covering AEP with a Buy rating and a $137 price target. Analyst projections included an 8.8% compound annual EPS growth through 2030. Retail power load and rate base expansions are expected to drive this growth.
The firm cited a nearly 9% expected increase in power load and 10% growth in the regulated rate base. These fundamentals support a long-term bullish view on earnings performance. Siebert Williams emphasized that diversified regulated investments reduce single-state regulatory risk.
The coverage suggests confidence in AEP’s ability to benefit from structural demand shifts. It also indicates belief in management’s long-term capital allocation strategy. While near-term volatility persists, some analysts see solid upside beyond 2026.
AI-Fueled Demand and Data Centers Key to Outlook
Analysts agree that AI-driven demand and data center expansion could reshape the utility landscape. AEP stands positioned to supply growing electricity needs as automation and computing intensify. As firms invest in onshoring and digital transformation, utilities like AEP may gain from higher infrastructure usage.
Morningstar expects AEP’s 7%–9% earnings growth target through 2030 to be achievable, especially with stronger industrial demand. The firm cites robust regulated asset investment as a key earnings driver. Long-term plans rely on stable returns and predictable growth in regulated markets.
Though recent price action signals caution, some see today’s dip as technical, not structural. The stock has risen 25.42% year-to-date through December 31, 2025. Still, sentiment remains mixed amid competing analyst forecasts and shifting macro drivers.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
