The NextEra Energy Partners (NYSE: NEP) stock price has bounced back recently as investors attempt to buy the dip. The shares jumped to a high of $28.88 on Friday, the highest point since September 29th. They have risen by over 41% from the lowest point this year but remain $65% below the 2022 high.
Clean energy cost concernsThe clean energy industry is going through major headwinds as interest rates remain a big concern. Recently, several companies in the industry have made negative headlines. Siemens Energy has sought for guarantees from the German government.
In a statement this month, Orsted abandoned its highly-subsidised wind power projects in New Jersey. At the same time, many solar energy companies like SunRun and Enphase Energy have seen their stocks tumble.
NextEra Energy Partners has not been spared. In September, the company slashed its forward guidance, pushing its stock price to sink. Several analysts then slashed their outlook for the stock.
The company published mixed financial results that missed analysts forecasts. Its net profit attributable to shareholders came in at $53 million. Its EBITDA came in at $488 million while cash available for distribution was $247 million.
The other important statement was the company’s decision to repower 740 megawatts of wind facilities through 2026. Repowerment is an ideal way that the company use to support its growth targets.
NextEra Energy Partners still faces numerous risks ahead. First, the company is in an industry that is not doing well. Therefore, it will continue being guilty by association, especially now that rates are expected to remain high for a while.
Second, the company faces a $1.3 billion maturity in 2024. That debt has a weighted annual rate of 2.75%, meaning that it will have a $55 million hit to its run rate. It also has a $700 million maturity in 2025. Talking of these maturities, the company said:
“The partnership also executed roughly $1.9 billion to hedge refinancing costs for the 2024 and 2025 maturities. The resulting expected refinancing costs of the maturities are factored into our expectations.”
In the long-term, NextEra Energy Partners is a good investment, thanks to its scale and solid dividend returns. The company has a forward dividend yield of 12.5%, which is quite safe. The yield is also higher than the short-term bond yield of about 5.5%.
NextEra Energy Partners stock price analysis
The daily chart shows that the NEP share price has made a strong recovery in the past few weeks. This rally continued after the company published mixed financial results. It remains below the 50-day moving average while the Relative Strength Index (RSI) and the Stochastic Oscillator have drifted upwards.
Therefore, I suspect that the shares will resume the downward trend as sellers target the psychological level at $20. This price is about 27% below the current level.
The post NextEra Energy Partners stock price is coming back: Is it a buy now? appeared first on Invezz
