Nextera Energy Partners Faces Uncertainty Amid Strategic Adjustments and Dividend Suspension
Nextera Energy Partners (NEP – Research Report), the Utilities sector company, was revisited by a Wall Street analyst on January 29. Analyst James Thalacker from BMO Capital maintained a Hold rating on the stock and has a $12.50 price target.
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James Thalacker’s rating is based on the strategic adjustments Nextera Energy Partners has undertaken, which have led to considerable uncertainty regarding its growth trajectory and capital return plans. The company’s decision to indefinitely suspend distributions marks a significant shift that was unexpected by many investors, contributing to a lack of clarity about future shareholder returns.
Given the elevated cost of capital, Nextera Energy Partners plans to utilize retained cash flow for necessary repayments and organic growth, without issuing external equity. However, the growth investments are aimed at maintaining current EBITDA levels rather than increasing them, due to the expiration of tax credits. The lack of a dividend yield and uncertain growth prospects have made the stock less attractive to certain institutional investors, leading to a sharp decline in its share price. Overall, the hold rating reflects the ambiguity around the company’s future performance and capital return strategy.
Thalacker covers the Utilities sector, focusing on stocks such as Ameren, American Electric Power, and Constellation Energy Corporation. According to TipRanks, Thalacker has an average return of 14.5% and a 64.71% success rate on recommended stocks.
In another report released on January 29, J.P. Morgan also assigned a Hold rating to the stock with a $13.00 price target.
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Nextera Energy Partners (NEP) Company Description:
NextEra Energy Partners LP engages in the acquisition, management, and ownership of contracted clean energy projects with long-term cash flows. It owns interests in wind and solar projects in North America, as well as natural gas infrastructure assets in Texas. The company was founded on March 6, 2014 and is headquartered in Juno Beach, FL.