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NextEra Energy (NEE) and NextEra Energy Partners (NYSE:NEP) on Wednesday downgraded it from “buy” to “neutral,” with price targets of $71 and $33, respectively, saying NextEra’s story remains impressive but growth is mostly reflected at current levels, trading at a P/E ratio of about 27% It trades at a premium to utility peers and has limited incremental catalysts to push the stock higher.
The Mizuho team, led by Anthony Crowdell, said following its analyst day this week that it believes the stock is indeed worth the money given its strong utility growth story and renewables execution. Premium valuation, but at current levels the stock is fully priced into the growth opportunity, and it sees a 6%-8% growth story for NextEra (NEE) with a balanced risk-reward profile.
NextEra (NEE) FPL has a history of reaching constructive settlements in Florida, and Mizuho believes the company is well-positioned to navigate next year’s regulatory landscape, adding that the utility’s allowed return on equity of 11.8% is the highest in its coverage universe level.
At NextEra Partners (NEP), Mizuho said management will continue to evaluate the possibility of resolving long-term balance sheet issues, but given the uncertainty of the path forward and a yield of about 11%, he believes current share price levels accurately reflect risk-reward profile.
