Nextera extends slump as KeyBanc steps to sidelines

AES

05/10/2023 17:07

** Shares of Nextera Energy  NEE.N  down 4.0% at $48.59 on
Thurs as KeyBanc downgrades renewable power provider to "sector
weight" from "overweight", citing growth sustainability concerns
    ** With move on the session, NEE shares have shed ~15% WTD
following 15% drop last week
    ** KeyBanc says NEE "remains in the penalty box" as
investors continue to be concerned about its subsidiary Nextera
Energy Partners  NEP.N  given rationing of financing options
following last week's guidance reduction
    ** NEP on Sept 27 slashed its cash distribution growth
guidance by about 50% to target growth rate of 6% through at
least 2026
    ** "NEP's growth triggers a conversation about NEER's
(NextEra Energy Resources) portfolio and its viability in a
higher for longer rate environment," KeyBanc says
    ** In contrast, KeyBanc says recent selloff in broader
utilities space "has created sufficient valuation dislocations
that investors can benefit from"
    ** Brokerage in turn upgrades DTE Energy  DTE.N , CMS Energy
 CMS.N  and Centerpoint Energy  CNP.N  to "overweight" from
"sector weight", and raises Pinnacle West  PNW.N  to "sector
weight" from "under weight"
    ** Rate-sensitive S&P 500 Utilities  .SPLRCU  sector falling
1.3% on Thurs as yields ease from 16-year highs
    ** With move on Thurs, SPLRCU down about 21% YTD and easily
the worst major S&P index performer followed by S&P 500 Real
Estate  .SPLRCR , off 10.5% in 2023

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))