On Tuesday, NextEra Energy (NYSE:NEE) experienced a significant decline in share price as the company presented at its 2024 Investor Conference. During the event, NextEra Energy announced the extension of its 6%-8% adjusted earnings per share (EPS) growth guidance through to 2027, based on a 2024 base year. This projection falls slightly short of the consensus expectations, which anticipate an approximate 8.6% compound annual growth rate (CAGR) over the same period.
In response to the presentation and the market's reaction, CFRA has adjusted its 12-month price target for NextEra Energy to $85 from the previous target of $87. Despite the reduction, CFRA maintains a Buy rating on the stock. The firm's analysis suggests that the market may have been disappointed by the company not presenting a more robust financial outlook.
CFRA points out that NextEra Energy has a history of achieving or surpassing the higher end of its guidance range for the past four years. Based on this track record, CFRA anticipates that the company is likely to realize close to 8% EPS growth through 2027. The new price target represents a multiple of 24.9 times CFRA's estimated EPS for 2024, which is set at $3.41 after a $0.01 increase. The 2025 EPS estimate remains unchanged at $3.68.
The valuation multiple applied by CFRA is a premium compared to NextEra Energy's peers, justified by the firm's expectations of faster EPS and dividend growth potential. However, the price target has been set below the company's historical average to account for the current higher interest rate environment. This adjustment reflects a balance between NextEra Energy's growth prospects and the broader economic factors that may influence its stock performance.
Edward Jones has maintained its Buy rating for NextEra Energy, citing the company's strong position in the renewable energy sector and favorable regulatory environment in Florida. BMO Capital Markets adjusted its outlook on NextEra Energy shares, increasing the price target to $78.00 from the previous $72.00, while maintaining its Outperform rating.
Additionally, Erste Group has upgraded NextEra Energy from Hold to Buy, reflecting confidence in the company's potential for sustained profit growth and shareholder returns. The company forecasts a 5% year-over-year increase in adjusted earnings per share (EPS) for 2024, with expectations set between $3.23 and $3.43. This positive outlook is bolstered by anticipated growth of 6 to 8% in 2025 and 2026 relative to the adjusted EPS of 2024.
InvestingPro Insights
Following NextEra Energy's investor conference and the subsequent drop in share price, it's valuable to consider additional metrics and insights. According to real-time data from InvestingPro, NextEra Energy's market capitalization stands at $149.36 billion, with a P/E ratio of 19.73 and a slightly higher forward P/E ratio (last twelve months as of Q1 2024) of 22.44. Despite the market's reaction to the EPS growth guidance, NextEra Energy has a robust revenue growth of 9.47% over the last twelve months as of Q1 2024, indicating a strong financial performance.
InvestingPro Tips highlight that NextEra Energy has raised its dividend for 28 consecutive years and maintained dividend payments for 54 consecutive years, which may interest income-focused investors. Additionally, the company's shares have seen a strong return over the last three months, with a 33.87% price total return. These factors, combined with analysts' predictions that the company will be profitable this year, offer a compelling case for potential investors.
For those interested in further analysis, InvestingPro offers additional tips on NextEra Energy's financial health and future performance. With an InvestingPro subscription, users can access these insights to make more informed investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 9 more InvestingPro Tips available for NextEra Energy, which can be found at: https://www.investing.com/pro/NEE.
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