Oct 13, 2023
NextEra Energy Partners pops as BofA raises to Neutral after IDR suspension (NYSE:NEP)
hrui NextEra Energy Partners (NYSE:NEP) +2.2% as Bank of America upgraded the
NextEra Energy Partners (NYSE:NEP) +2.2% as Bank of America upgraded the stock to Neutral from Underperform with a $60 price target, raised from $53, citing above-average 12%-15% distribution per unit growth balanced with high capital markets access.
The incentive distribution relief suspension for 2023-26 announced by majority owner NextEra Energy (NEE) provides NextEra Partners (NEP) with $628M in additional cash flow over the four years, removing "near-term capital markets overhang" and increases distributable cash flow value by more than $3/share, BofA's Julien Dumoulin-Smith said, seeing a more balanced risk/reward profile "with less pressure on shares."
While the short-term IDR relief will help bridge the medium-term outlook, Dumoulin-Smith said NextEra Energy (NEE) will need a healthy NextEra Partners (NEP) over the long term to facilitate future dropdowns into NEP for achievement of the distribution per unit growth trajectory.
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