NextEra Partners ‘not a primary beneficiary of rising power demand,’ JPM says in cut

NextEra Energy Partners (NYSE:NEP) -7.7% in Thursday’s trading after J.P. Morgan downgraded units to Underweight from Neutral with a $25 price target, noting its sharp rally during the past month alongside parent NextEra Energy (NEE).

JPM’s Mark Strouse says he does not view NextEra Partners (NEP) as a primary beneficiary of rising power demand and believe near-term risk remains around the company’s longer-term obligations and its ability to accretively finance potential dropdown acquisitions.

The analyst thinks NextEra Partners (NEP) is “currently evaluating its longer-term CEPF obligations and we believe all options are on the table, including a potential dilutive private capital raise or a portfolio asset sale.”

JPM’s top picks among clean energy stocks are Hannon Armstrong (HASI) and TPI Composites (TPIC), as the bank believes HASI’s end-market diversification positions the stock well in the current environment, and strong order activity from wind OEMs over the past year should begin to funnel down to TPIC’s blade business in the coming quarters.