Wells Fargo Raises AEP Price Target as Utility Giant Advances $2.65 Billion Fuel Cell Project
American Electric Power (NASDAQ: AEP), a prominent name among high-yield dividend stocks, received a vote of confidence from Wall Street this week. Analysts at Wells Fargo increased their price target on the utility giant to $140 from $139, maintaining an Overweight rating. The adjustment, the firm noted, reflects a routine rolling forward of its valuation model to 2028, underscoring a stable long-term outlook for the regulated utility.
The revised valuation comes amid significant strategic moves by the Columbus-based company. AEP is moving forward with a substantial $2.65 billion investment in solid oxide fuel cell technology through its agreement with Bloom Energy. Initially securing 100 megawatts in 2024, AEP has now exercised an option to purchase an additional 900 MW, signaling a major commitment to alternative energy generation.
Perhaps more critically for investors, AEP has de-risked the project by securing a 20-year power offtake agreement with an undisclosed customer for the full output of the planned facility near Cheyenne, Wyoming. The agreement, contingent on certain conditions expected to be met by the second quarter of 2026, includes provisions for financial compensation should the deal fall through, protecting AEP's capital investment.
"This isn't just a minor target tweak; it's a reflection of AEP executing a complex, capital-intensive transition play," said Michael Rivera, a utilities sector analyst at Hartford Capital. "The secured offtake agreement transforms a speculative green tech bet into a predictable, long-term revenue stream, which is exactly what income-focused investors in this sector want to see."
Sarah Chen, a portfolio manager specializing in energy infrastructure, offered a more tempered view. "While the fuel cell project is innovative, the Wells Fargo target increase is essentially mechanistic—just updating the model year. The real story is whether AEP can navigate regulatory approvals and construction on budget. Their core regulated utility business remains the bedrock, and that's what supports the dividend."
Not all observers were impressed. "A one-dollar price target bump is a rounding error, not news," commented David Feldstein, a vocal critic of utility sector hype. "This feels like a press release masquerading as analysis. Meanwhile, they're locking ratepayers into a two-decade contract for power from unproven-at-scale technology. Where's the discussion on the potential cost overruns that will inevitably land on customer bills?"
As one of the nation's largest electric utilities, serving over five million customers across 11 states, AEP's balancing act between reliable dividends, energy transition, and regulatory compliance remains a key focus for the market.