#NextEraEnergy #UtilityStocks #EquitySale
NextEra Energy, a leading utility stock, experienced a significant decline of nearly 5% in early trading on Tuesday after announcing plans to sell $2 billion in equity units. This move is aimed at financing energy projects and repaying debt.
The Florida-based power company, which operates the largest renewable energy portfolio in the U.S., intends to issue these equity units at a price of $50. Each unit functions as a contract obligating purchasers to buy shares no later than June 1, 2027. The units also include a 5% undivided beneficial ownership interest in a debenture due June 1, 2029, guaranteed by NextEra Energy Capital Holdings' parent company, NextEra Energy, Inc.
The utility sector has seen a surge this year, driven by increasing electricity demand from data centers, the resurgence of U.S. manufacturing, and the electrification of vehicle fleets. The sector has recorded approximately 8.5% growth over the past three months, surpassing the 6.2% gain of the S&P 500. NextEra Energy has been a standout performer, with a 20% increase over the same period.
Despite this growth, the utility sector has witnessed a cooling trend over the past month, with NextEra experiencing a 5% decrease. The stock took a hit after its recent investor day, as some investors expressed disappointment that the company did not project stronger earnings growth given the anticipated energy demand over the next decade.
Goldman Sachs has advocated that the drop in NextEra's stock represents a buying opportunity. The analysts believe that the long-term growth prospects for $NEE remain robust and are expanding with the anticipated inflection in power demand growth, despite the fact that logistically, it will take time for these projects to be built and contribute to earnings.
Approximately 71% of Wall Street analysts rate NextEra as a buy, while 24% have placed a hold on the stock and 4.8% recommend selling. The analysts' average price target stands at $77.08 per share, suggesting a 6.5% increase from Monday's closing price.
Original Article: https://www.cnbc.com/2024/06/18/hot-utility-stock-nextera-falls-nearly-5percent-after-announcing-plan-to-sell-2-billion-in-equity-units.html
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