NextEra Energy Partners Stock Jumps After Double Upgrade: Retail Cheers
Morgan Stanley upgraded NextEra Energy’s acquisition arm to ‘Overweight’ from ‘Underweight’ with a price target of $22.
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FollowShares of NextEra Energy Partners ($NEP) soared nearly 10% in morning trade on Monday after Morgan Stanley gave the stock a double upgrade to ‘Overweight’ from ‘Underweight’ with a price target of $22.
Meanwhile, its parent company NextEra Energy ($NEE), saw its shares fall by over 1%.
NextEra Energy Partners is a subsidiary of NextEra Energy focused on acquiring and managing contracted clean energy assets to generate stable cash flows for investors.
While uncertainty looms over federal clean energy policies following President elect-Donald Trump’s win in the U.S. Election 2024, Morgan Stanley expects minimal impact on renewable infrastructure.
The brokerage highlighted that a full repeal of the Inflation Reduction Act (IRA) is unlikely due to bipartisan support for domestic manufacturing incentives and clean energy projects in Republican-led states.
It also noted that the recent selloff offers a compelling buying opportunity, especially with the conclusion of the company's strategic review expected by December.
NextEra Energy Partners’ stock fell nearly 15% on Oct. 23 after the company reported a wider-than-expected loss of $0.43 per share for the third quarter. NEP also announced a 37% reduction year-over-year (YoY) in cash available for distribution raising red flags about future payouts.
Retail sentiment around the stock jumped two levels as well, to ‘extremely bullish’ (76/100) from neutral a day ago, along with an uptick in chatter to ‘high’ from ‘low’ on Thanksgiving weekend.
Some investors on the platform don’t expect dividends to be cut at all.
Like Morgan Stanley, JP Morgan also expects the companies’ strategic review to uplift market sentiment. In a research note after NextEra Energy Partners’ third quarter results, the brokerage highlighted that a transfer of assets from its parent company and an adjustment in dividend payouts could provide a clearer picture of how the company plans to grow,
“A dropdown announcement, in conjunction with a distribution reset, could be a catalyst for the stock and provide increased growth visibility into fiscal 2026 and beyond,” JP Morgan said.
The stock has lost over 38% of its value this year so far.
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