Credit Suisse: NextEra Energy A 'Premier Solar And Wind Play'

NextEra Energy Inc NEE managed to post better-than-expected third quarter profit  Oct. 26, but failed to beat the revenue consensus in the earnings report.

The Analyst

Credit Suisse's Michael Weinstein initiated coverage of NextEra Energy with an Outperform rating and $173 price target. 

The Thesis

NextEra Energy is a premier way to invest in a coming revolution for the electric generation industry, Weinstein said. (See Weinstein's track record here.)

Lower prices in renewables and battery storage could lead to the replacement of significant portions of conventional nuclear, coal, and gas-fueled electricity, the analyst said. 

NextEra's projected growth of 8 percent is above the peer average of 4-6 percent, Weinstein said. The growth is driven by "a combination of transmission and distribution upgrades (nearly half), cost-saving gas-fired generation efficiency upgrades, regulated solar under trackers and continued hurricane storm hardening work," the analyst said. 

Weinstein expects NextEra's dividend policy to be revisited by management in the first quarter of 2018, and said he sees the risk for his thesis in M&A, project execution, tax reform impacts on renewable growth, yield co structure and cost of capital.

The Price Action

The stock, which is trading flat Thursday, has gained around 32 percent year-to-date.

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