NextEra Energy Partners (NEP) stock: 13% yield, worrying technicals

December 10, 2023 10:00 PM PST | By Invezz
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NextEra Energy Partners (NYSE: NEP) stock price has been hammered this year. The shares plunged to a low of $19.59 in October as investors dumped solar and wind companies. In all, the stock has plunged by more than 67% from its highest point this year. This crash has brought its total market cap to more than $2.43 billion.

Solar and wind concerns remain

NextEra Energy Partners and other companies in the clean energy industry are not doing well as interest rates jumped. In the United States, the Federal Reserve has pushed rates to the highest point since 2002. 

High rates have made it expensive to deploy most clean energy projects in most countries. Recently, Orsted, a major wind energy company, abandoned some of its American projects in New Jersey.

Similarly, Siemens Energy was rescued by the German government as its business slowed and losses mounted. Siemens Energy is a major company that manufactures wind turbines for its global customers.

NextEra Energy is integral in the clean energy sector, where it acquires, manages, and owns contracted clean energy projects with stable long-term cash flows. Its key projects are in the solar, wind, and natural gas.

NextEra Energy Partners has worked hard to solve its financial issues. In November, it agreed to sell its south Texas assets in a $1.8 billion deal to Kinder Morgan. 

In December, the company raised $750 million at 7.25% to pay its debt. The capital raise came just a month after Seaport Global downgraded the stock from neutral to sell with a $15.50 target. The report cited the company’s financing issues and a potential for a dividend cut.

NextEra is a highly leveraged company that had over $1.3 billion in short-term debt and more than $5.14 billion in long-term debt.

Some analysts believe that the company has become severely oversold and overvalued. For one, a change of tune by the Federal Reserve will likely improve stocks that have crashed during the rate hikes.

At the same time, they note that the company has a high dividend yield that is quite attractive. NextEra Energy Partners has a forward yield of 13.35%, which is higher than many Wall Street companies. 

NextEra Energy Partners stock price analysis

NextEra Energy Partners

NEP chart by TradingView

The weekly chart shows that the NEP stock price has been in a strong downtrend in the past few months. A closer look shows that it remains below the 50-week and 100-week moving averages.

Most importantly, the stock has formed a bearish pennant pattern, which is characterised by a long pole and a triangle pattern. Therefore, the outlook for the stock is still bearish, with the next point to watch being at $19.60, the lowest point this year.

The post NextEra Energy Partners (NEP) stock: 13% yield, worrying technicals appeared first on Invezz


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