NextEra's Renewables Focus And Strong Balance Sheet Justify Premium Valuation: Goldman Sachs

Goldman Sachs analyst Carly Davenport reaffirmed a Buy rating on NextEra Energy, Inc. NEE with a price forecast of $94, after the company’s Development Day on March 18 in Florida.

The analyst writes that the company emphasized renewables as a key solution to current supply chain challenges and the higher costs of building gas power plants.

Notably, the analyst notes that management continues to face challenges in building new gas generation due to supply chain issues and rising costs.

The company targets power demand to grow by 55% by 2040, including 17% from data centers, 11% from residential and 11% from transportation, notes the analyst.

Following the event, Davenport says they are positive about the company’s competitive advantages in generation and transmission development.

This, coupled with earnings growth, favorable regulatory jurisdiction exposure, and a solid balance sheet, should support a premium valuation, adds the analyst.

In January, the company reported fourth-quarter revenue of $5.385 billion, missing the estimate and adjusted EPS of $0.53, in line with the consensus.

Investors can gain exposure to the stock via SPDR Select Sector Fund – Utilities XLU and Fidelity MSCI Utilities Index ETF FUTY.

Price Action: NEE shares are down 0.45% at $70.39 at the last check Wednesday.

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