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Why Brokers Are Positive about NextEra Energy after Its 1Q16 Earnings

Vincent Kruger

NextEra Energy's Looking Good after 1Q16, and Here's Why

(Continued from Prior Part)

NextEra Energy: outlook

NextEra Energy (NEE) continued a splendid performance in 1Q16. Considering its track for the future, NEE’s subsidiary Florida Power & Light has recently proposed a rate case for the next four years. This includes revenue requirements of $866 million in January 2017, $262 million for 2018, and 209 million for its clean energy center in 2019. NextEra Energy Resources is actively expanding its renewables (PBW) portfolio, which is expected to drive earnings growth.

Additionally, NextEra Energy’s regulated rate base is expected to expand after the completion of its ongoing acquisition of Hawaiian Electric Company (HE). However, the deal’s completion depends on regulatory approval and may take time. Strong regulated operations have supported earnings, which have risen at a CAGR (compound annual growth rate) of 8% in the past ten years. Dividends also rose in line with earnings over the same period. Hence, by looking at the positives and challenges in the sector (JXI), NextEra Energy seems to have the potential to deliver handsome total returns for investors in the future.

Target prices

According to Wall Street analysts, NextEra Energy has the potential to rise by 7% during the next year. NEE has a target price of $124.7, as compared to its current price of $116.5.

Of the 23 analysts tracking NextEra Energy, 18 analysts have given it “buy” recommendations, and five analysts have given it “hold” recommendations. No one has given NEE a “sell” recommendation as of April 29, 2016.

Southern Company (SO) has a price target of $49.8, as compared to its current market price of $49.5. This implies a possible upside of 0.5% in one year. Dominion Resources (D) has a target price of $77, which represents a rise of ~7% compared to its current price of $73. Duke Energy (DUK) has an estimated upside of 2% and a price target of $79.7. DUK is currently trading at $78 as of April 29, 2016.

For related analysis, keep checking in with Market Realist’s Energy and Power page.

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