🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Investor confidence in NextEra Energy Partners will be 'difficult to restore' - Wells Fargo

EditorRachael Rajan
Published 2023-10-02, 11:46 a/m
© Reuters.
NEE
-
NEP
-

Wells Fargo analysts downgraded NextEra Energy Partners LP (NYSE:NEP) to Equal Weight from Overweight, cutting the price target to $33 from $80 per share in a note Monday.

The analysts explained that "NEE's decision to not proceed with an asset drop down and cut NEP's growth goal created a crisis in confidence in NEP that will be difficult to restore."

NextEra Energy Partners (NEP) is a limited partnership formed by Nextera Energy Inc (NYSE:NEE).

"On 9/27, NEE surprised investors with a decision to not proceed with a planned asset drop down to NEP due to unfavorable economics," the analysts explained.

"As a structure that pays out nearly 100% of CAFD, the success of NEP is tied to the ability to raise equity and debt capital on favorable terms. As such, investor confidence really matters."

They continued: "Despite NEE's attempts to prop NEP up, the prolonged slump in NEP's units (driven by high rates and CEPF buyout concerns) resulted in an unattractive cost of capital relative to NEE's other financing options."

Given the myriad of questions and uncertainties, Wells Fargo believes it is prudent to move to the sidelines on NEP.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.