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UBS maintained its buy rating and $84.00 price target on NextEra Energy (NYSE:NEE) Tuesday, citing the Senate’s approach to renewable tax credit phase-outs as more favorable than the House version. Currently trading at $73.27, NEE has received mixed signals from analysts, with five recently revising earnings estimates downward according to InvestingPro data.
The Senate proposal provides NextEra with "more flexibility" to manage earnings impacts as the company transitions away from tax credits, according to UBS. The research firm noted this approach aligns with or exceeds investor expectations that the Senate version would be "at least marginally better" than the House version. With a solid dividend track record spanning 55 consecutive years and a current yield of 3.07%, NextEra has demonstrated consistent shareholder returns despite regulatory changes.
NextEra has already safe harbored renewable assets to meet growth targets through 2029, and UBS believes the proposed changes would create additional growth opportunities for the company. The firm specifically mentioned that the Foreign Entity of Concern (FEOC) language in the legislation does not pose a "material issue" for NextEra.
The phase-out approach in the Senate version contrasts with the House proposal, which apparently contained more abrupt changes to renewable tax credits. UBS views the Senate’s gradual approach as more beneficial for NextEra’s business planning.
NextEra Energy, a major renewable energy developer and utility company, relies partially on tax credits to support its renewable energy projects and overall growth strategy. The company’s ability to continue leveraging these incentives, even on a declining basis, appears to be a key factor in UBS maintaining its positive outlook.
In other recent news, NextEra Energy reported its financial results for the first quarter of 2025, surpassing earnings per share (EPS) expectations but missing revenue forecasts. The company achieved an EPS of $0.99, exceeding the projected $0.91, while revenue reached $6.25 billion, falling short of the anticipated $6.71 billion. Erste Group downgraded NextEra Energy’s stock from Buy to Hold, citing concerns over rising financial leverage despite expectations of a 6% to 8% annual EPS growth through 2027 and a 10% annual dividend increase until 2026. Meanwhile, UBS maintained a Buy rating with a price target of $84, reflecting optimism about the ongoing Florida rate case, which could influence the company’s financial performance. Mizuho (NYSE:MFG) Securities adjusted its price target for NextEra Energy to $69 from $73, retaining a Neutral rating, acknowledging the company’s effective management of tariffs and tax credits. The Florida Power & Light rate case remains a focal point, with potential outcomes expected to impact NextEra Energy’s financial outlook. These developments come as NextEra Energy continues to focus on renewable energy projects, significant investments, and strategic financial management.
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