NextEra Energy's Strong Quarter Catches Wall Street's Eye

Key Points

• NextEra Energy stock is still promising up to a double-digit upside from where it trades today; new demand waves are there to push it.
• Wall Street analysts agree on new price targets to reflect this secular tailwind, which will help the stock move higher. 
• Institutional buyers have crowded the stock this year, making short sellers start to ditch the company.

The future of the energy sector lies in the most attractive and developed alternative energy sources. While this might not be an immediate payoff for those backing the trend, it does serve as a good place to start allocating capital with the next decade in mind. Today, shares of Next Era Energy Inc. NYSE: NEE remind investors of this fact, especially after its recent quarterly earnings results.

The stock is moving higher by nearly 4% at the market open from its financial release, and Wall Street analysts now call for further double-digit rallies for this company, one that might become an investor favorite in the coming months. As value stocks start to outperform growth stocks in this economic landscape, names like Next Era Energy stock could see preferential treatment from the markets.

More than that, today’s earnings will show investors whether Next Era stock is worth keeping—or adding to—after earnings implications. This is quickly becoming a hot topic after consumer discretionary giant Amazon.com Inc. NASDAQ: AMZN decided to enter the sector, this time through renewable energy sources.

Key Drivers Set to Push NextEra Energy Stock to New Long-Term Highs

While NextEra Energy has already delivered an impressive 61.9% return over the past 12 months, amazing for a utility company known for its low beta exposure, there are reasons to believe that this company could keep bringing on more upside than what has already been seen.

The answer to these trends can be found in some of the main drivers found in the company’s latest earnings press release. Starting with the fact that NextEra delivered up to 10% in earnings per share (EPS) growth, the optimistic outlook has more facts to cover.

Focused mainly on Florida’s energy market, NextEra’s investor presentation shows how that sets up the brand for sustained growth in the coming years. With Florida’s GDP growing along with its population, NextEra has seen massive customer growth of over 25% in only one year.

While the main focus for the business rests in solar energy, NextEra is also starting to invest some of its resources into nuclear energy, the one source that Amazon has decided to bet on moving forward. At the end of the day, nuclear energy is probably one of the most underrated yet most effective energy sources, but so far solar is the one dominating today’s market.

That's why NextEra has projected to triple its gigawatt output from today’s 7.3-gigawatt capacity in solar energy to 22.4-gigawatt capacity by 2027. This threefold increase in capacity and demand will surely land the company on a bullish path, one that investors still have time to get behind.

Retail investors wouldn’t be alone in making this decision, as NextEra Energy stock has seen up to $9.7 billion of institutional capital, led by International Assets Investment Management, enter the company over the past 12 months alone.

These allocators boosted their NextEra Energy stock holdings by 8,641% as of October 2024, bringing their net position to a new high of $326.4 million today. Of course, this insider sentiment wouldn’t mean much if Wall Street wasn’t on the same side of the story, so here’s what analysts think of NextEra Energy stock today.

Wall Street's Take on NextEra Energy Stock

Even though the stock trades up to 98% of its 52-week high, some on Wall Street think the company has a few more percentage points of room to run higher—particularly those at Wells Fargo, who recently reiterated their Overweight rating on the company.

This time, they also placed a price target of up to $102 a share on NextEra Energy stock. To prove this new view right, the company would have to deliver a rally of 21.3% from where it trades today, not to mention a new high price for the year.

Based on these new ratings and the bullish price action, some bearish traders also decided to ditch their negative views, as NextEra’s short interest declined by as much as 10.8% last month.

More than that, now that Paul Tudor Jones announced sustained high inflation ahead, NextEra Energy stock’s dividend payout of 2.5% today becomes more attractive for investors looking to protect their capital from higher inflation rates.

To protect this stock's income-generating power, management has also projected a net growth rate of up to 10% in dividend payouts through 2026.