NextEra Energy Poised For Strong EPS Growth With Renewable Expansion, Says Goldman Sachs Analyst

Goldman Sachs analyst Carly Davenport raised the price target for NextEra Energy, Inc. NEE to $92 (from $86) and reiterated the Buy rating.

Recently, the company reported third-quarter adjusted EPS of $1.03 exceeded the estimate of $0.98, while sales of $7.567 billion fell short of the $8.054 billion estimate.

The analyst says the quarter underscored strong demand for renewables amid growing power needs, showcasing NEE’s competitive advantages as a developer to capitalize on this trend.

While the analyst remains optimistic about NEE’s potential to expand its renewables capacity in the coming years, they also see opportunities to incorporate nuclear (through Duane Arnold) and gas to meet increasing power demand from a diverse range of industries, not just tech companies.

Davenport anticipates this will support earnings growth exceeding the company’s current guidance of 6%-8%, with projected EPS growth averaging 10% from 2024 to 2027.

The analyst sees strong near- and medium-term demand for renewable power, driven by growth in sectors beyond technology and AI.

Davenport says that the company is well-positioned to meet its renewable development targets, needing to add just 1.7 GW per quarter to reach the midpoint of its range, compared to around 3 GW in the previous two quarters.

The analyst maintains a positive outlook on the company’s backlog additions, anticipating the development of approximately 44 GW of renewables from 2024 to 2027, compared to guidance of 36.5-45.5 GW.

To hit the midpoint of this range, the analyst estimates that NEE needs to add 1.7 GW per quarter, assuming no further backlog additions occur after the fourth quarter of 2026.

Investors can gain exposure to the stock via Virtus Reaves Utilities ETF UTES and SPDR Select Sector Fund – Utilities XLU.

Price Action: NEE shares are down 1.09% at $81.91 at the last check Friday.

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