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On Wednesday, JPMorgan analyst Mark Strouse reduced the price target for XPLR Infrastructure (NYSE: NEP) to $13.00, down from $20.00, while keeping a Neutral rating on the stock. According to InvestingPro data, the stock currently trades at $10.57, with analysis suggesting it may be undervalued. Strouse’s analysis followed the company’s strategic update, which was released alongside its fourth-quarter results. XPLR Infrastructure, previously known as NextEra Energy (NYSE:NEE) Partners, has decided to indefinitely suspend its dividend, a move that was more drastic than the consensus expectation of a 34% reduction.
The firm is shifting from a YieldCo model, characterized by the distribution of most cash flow as dividends, to a RetainCo/GrowthCo model. In this new framework, XPLR Infrastructure will retain project cash flow to manage debt and invest in repowering existing projects, as well as pursuing additional investments. According to the update, the company plans to acquire all CEPFs using retained cash flow, debt financing, and asset sales, without the need for new equity. Credit ratings have remained stable following these announcements.
XPLR Infrastructure’s transition includes a management overhaul, with the new team comprised entirely of NextEra Energy (NEE) employees now fully dedicated to XPLR. Despite these changes, NextEra Energy maintains a roughly 51% ownership stake in the company. Following the strategic update, XPLR’s shares experienced a significant 34% decline since Tuesday, while the S&P 500 saw a slight increase of 0.6%. The drop in XPLR’s stock price may be attributed to a shift in the investor base, as yield-focused investors begin to withdraw.
Strouse believes that the market’s reaction might be somewhat exaggerated but acknowledges that XPLR Infrastructure’s success in executing asset sales and CEPF buyouts, as well as demonstrating its long-term cash flow potential, will be crucial in rebuilding investor trust. Supporting this view, InvestingPro analysis indicates the stock is in oversold territory, with revenue growing at 14.1% in the last twelve months. The revised year-end 2025 price target reflects these considerations and the new strategic direction of the company. For comprehensive analysis of XPLR’s valuation and growth prospects, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, XPLR Infrastructure, formerly known as NextEra Energy Partners, reported a larger than expected fourth-quarter loss for 2024, leading Guggenheim Securities to lower the stock’s price target from $17.00 to $12.00 while maintaining a Neutral rating. Despite the company’s net loss, which included a one-time after-tax impairment of goodwill totaling $194 million, XPLR Infrastructure achieved an adjusted EBITDA of $483 million for the quarter and $1.959 billion for the full year. The company also announced a strategic shift, suspending its dividend and 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. Looking ahead, XPLR Infrastructure forecasts an adjusted EBITDA that is roughly flat year-over-year for 2025 and anticipates an adjusted EBITDA between $1.75 billion and $1.95 billion for 2026. The company plans to refinance approximately $2.8 billion of debt maturities and convertible equity portfolio financing buyout payments in the coming years.
These recent developments show XPLR Infrastructure’s commitment to its new strategy and its efforts to improve financial performance. Guggenheim Securities emphasized that despite the lowered price target, XPLR Infrastructure’s potential future cash flow generation of $600-700 million is not reflected in the current stock price. The company’s relationship with its largest unitholder, NextEra Energy, remains unchanged, providing stability amidst these changes.
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