Why NextEra Energy Partners Stock Is Diving Today?

NextEra Energy Partners LP NEP shares are trading lower by around 18% after the company revised its limited partner distribution per unit growth rate to 5% to 8% annually through at least 2026, with an expected growth rate of 6%.

NEP doesn't expect to require growth equity to meet its revised growth expectations until 2027 through lowering the growth rate, previously announced the sale of the natural gas pipelines, and the buyouts of the convertible equity portfolio financing payments due through 2025.

Also, the company plans to repower most of its wind portfolio in the coming years and acquire wind, solar and storage assets from NextEra Energy Resources and other third parties at favorable yields.

"NextEra Energy Partners is revising its long-term growth rate expectations for limited partner distributions to increase its flexibility as it continues to execute on its growth opportunities. Tighter monetary policy and higher interest rates obviously affect the financing needed to grow distributions at 12%, and the burden of financing this growth has had an impact on NextEra Energy Partners' unit price and yield. In the current market environment, the partnership believes revising its growth expectations for now is the appropriate decision for unitholders and better positions it to continue to deliver long-term value," stated John Ketchum, chairman and CEO.

Outlook: NEP also revised its year-end run-rate expectations for adjusted EBITDA and CAFD, expecting run-rate contributions for adjusted EBITDA and CAFD from its forecasted portfolio to be in the ranges of $1,900 million-$2,100 million and $730 million-$820 million, respectively. This reflects FY24 contributions from the forecasted portfolio at year-end 2023. 

The company now expects the annualized rates of Q3 2023 distribution per common unit to be $3.47, payable in November 2023, and Q4 2023 distribution per common unit to be $3.52, payable in February 2024.

Also Read: Upgraded To Outperform: Analyst On How NextEra Energy Partners Is Poised To Defy Capital Market Challenges

Price Action: NEP shares are down 17.8% at $38.54 on the last check Wednesday.