NextEra Energy started at Hold, NextEra Partners with Buy at Jefferies

NextEra Energy (NYSE:NEE) -3.1% in Thursday’s trading, giving up a chunk of recent gains that lifted shares to 52-week highs, as Jefferies initiated coverage with a Hold rating and $87 price target.

As the largest U.S. clean energy developer, NextEra (NEE) is well positioned to benefit from the acceleration of renewables demand from recent positive revisions to load growth projections driven by electrification and data centers, although this growth will start materializing beyond the current 2024-27 plan, Jefferies’ Julien Dumoulin-Smith said.

But NextEra Energy (NEE) shares have substantially outperformed and now trade at a 30%-plus premium to the average utility 2027 P/E, the analyst said.

NextEra Energy Partners (NYSE:NEP) +3.3% as Dumoulin-Smith initiates the name with a Buy rating and $28 PT, noting the partnership needs to address ~$3.7B of convertible equity portfolio financing buyouts during 2025-32, but the analyst thinks this can be handled with internally generated cash and that shares already are embedding a substantial dividend cut.

Even after addressing the buyouts, the analyst calculates that NextEra Partners (NEP) still generates an average $1.78/unit of excess cash over the buyout period, equating to a 7% yield; as such, he sees limited downside risk at current levels and thinks additional upside is possible from a sale at a premium to a new sponsor.