The Bull Case For Atmos Energy (ATO) Could Change Following Morgan Stanley’s Election-Year Downgrade Decision

In December, Morgan Stanley downgraded Atmos Energy Corporation to Equal Weight from Overweight as part of its 2026 utilities outlook, highlighting political and regulatory risks during an election year even as the company continues to emphasize its regulated model and infrastructure modernization. This shift in analyst stance contrasts with Atmos Energy’s long record of earnings growth and its internal guidance for 6%–8% earnings expansion supported by ongoing investments in safety, innovation, and environmental initiatives. With Morgan Stanley’s downgrade citing heightened election-year regulatory risk, we’ll now examine how this development reshapes Atmos Energy’s investment narrative.

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Atmos Energy Investment Narrative Recap

To own Atmos Energy, you need to believe in the stability of a fully regulated natural gas utility that is investing heavily in modernization while managing rising costs and leverage. Morgan Stanley’s downgrade highlights election-year regulatory uncertainty, but it does not materially change the near term focus on rate case outcomes and capital spending execution as the key catalyst and primary risk.

The most relevant upcoming event is Atmos Energy’s fiscal 2026 first quarter earnings release and conference call on February 3 and 4, which should provide an update on how management is aligning its 6% to 8% earnings growth guidance with elevated capital expenditures, regulatory developments in Texas, and any early signs of election-year scrutiny that could influence allowed returns and cost recovery.

Yet behind the steady earnings guidance, investors should be aware that growing capital needs and regulatory dependency could…

Read the full narrative on Atmos Energy (it’s free!)

Atmos Energy’s narrative projects $6.3 billion revenue and $1.6 billion earnings by 2028. This requires 11.1% yearly revenue growth and about a $0.4 billion earnings increase from $1.2 billion today.

Uncover how Atmos Energy’s forecasts yield a $175.73 fair value, a 5% upside to its current price.

Exploring Other PerspectivesATO 1-Year Stock Price Chart

Three members of the Simply Wall St Community value Atmos Energy between US$121.96 and US$175.73 per share, showing a wide spread of expectations. When you set these side by side with the election year regulatory risk highlighted by Morgan Stanley, it becomes clear that views on Atmos Energy’s future resilience can differ sharply and are worth comparing.

Explore 3 other fair value estimates on Atmos Energy – why the stock might be worth as much as 5% more than the current price!

Build Your Own Atmos Energy Narrative

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
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Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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