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On Tuesday, Guggenheim Securities adjusted its outlook on NextEra Energy (NYSE:NEE) Partners (NYSE:NEP), now known as XPLR Infrastructure, by lowering the stock’s price target from $17.00 to $12.00 while maintaining a Neutral rating. The decision came after the company reported its fourth-quarter earnings for 2024 and unveiled a comprehensive strategic and financial overhaul. This announcement led to a significant 30% drop in the stock’s value, a stark contrast to the S&P 500’s 1% decline.
Analysts at Guggenheim noted that the market’s reaction to XPLR’s earnings and strategic changes was largely technical. Institutional investors are moving away due to the stock’s zero-income generation status, and approximately half of the retail investors that make up the company’s ownership are exiting. Despite these challenges, Guggenheim believes the potential future cash flow generation of $600-700 million is not reflected in the current stock price. InvestingPro data shows strong revenue growth of 34% over the last twelve months, with a healthy current ratio of 2.02 indicating solid liquidity position.
XPLR’s strategic pivot includes halting distributions completely until further notice to prioritize equity-free repowering and CEFP buyouts. Guggenheim acknowledges that without distributions and considering a higher cost of capital and execution risks, it is difficult for investors to commit to a capital allocation strategy that lacks a clear path to returns. The sale of the Meade pipeline and the CEFP buyout are key steps in the company’s simplification measures, and their successful execution is critical for investor confidence.
The firm also indicated that XPLR’s new, cleaner capital structure could offer more strategic flexibility, potentially attracting private capital or allowing the company to return to growth. Despite the lowered price target, Guggenheim reiterated its Neutral rating, emphasizing that NextEra Energy (NEE) has reaffirmed its financial plans and does not anticipate the distribution cut to impact its financing strategy, as the cut represents only a 1-2% loss of cash from operations. For deeper insights into XPLR’s financial health and future prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
In other recent news, XPLR Infrastructure announced a suspension of its dividend and a strategic shift, causing a significant drop in its stock. The company reported a net loss for the fourth quarter of 2024, which included a one-time after-tax impairment of goodwill totaling $194 million. However, the adjusted EBITDA for the quarter was $483 million, and for the full year, it stood at $1.959 billion.
XPLR Infrastructure’s new strategy involves reallocating capital towards selected convertible equity portfolio financings and investing in existing assets. Alan Liu has been appointed as the new president and CEO, bringing his expertise from senior roles at NextEra Energy and Goldman Sachs.
For 2025, XPLR Infrastructure forecasts an adjusted EBITDA that is roughly flat year-over-year. Looking ahead to 2026, the company anticipates an adjusted EBITDA between $1.75 billion and $1.95 billion. The company’s relationship with its largest unitholder, NextEra Energy, remains unchanged, and it plans to refinance approximately $2.8 billion of debt maturities and convertible equity portfolio financing buyout payments in the coming years.
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