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NextEra Energy stock price oversold: Goldman sees a 40% rebound

By: Invezz

NextEra Energy (NYSE: NEE) stock price continued its strong bearish trend this week as demand for clean energy shares dipped. The shares have dropped in the past three straight days and are now hovering at the lowest level since May 2020. They were trading at $51.90, meaning they have shed over 42% of its value. 

Clean energy headwinds

NextEra is one of the leading companies in the utility industry with a market cap of more than $115 billion. It supplies millions of American homes with reliable energy from numerous sources. It is a clean energy giant that focuses on wind, solar, nuclear, battery storage, and natural gas. 

NextEra’s stock price plunge is a sign of the challenges that are facing companies in the wind and solar industries. For example, a number of American governors recently warned the Biden administration about wind. 

Orsted, a leading Danish company, has also warned that it could exit the American market. Further, Siemens Energy, a leading manufacturer of wind turbines, has been the worst-performing stock in the DAX index.

The ongoing NEE stock crash accelerated after NextEra Energy Partners downgraded its growth forecast for the year. It slashed its full-year run rate and adjusted EBITDA, pushing analysts at JP Morgan and Oppenheimer to downgrade their outlook.

The biggest concern for NextEra Energy is that higher interest rates are making it quite expensive to implement large projects. Therefore, analysts believe that the company’s earnings will remain under pressure for a while. Also, there are concerns that the $13 billion interest rate hedges only cover this year. The management has stated that these hedges have longer durations.

Analysts at Goldman Sachs believe that NextEra Energy stock is still a good investment. In a note, they maintained a buy rating and even as they slashed their price target to $72 from $83. If their forecast is accurate, it means that the shares could rise by 40%.They believe that the current decline has been overdone, noting:

“We believe NEE will be able to navigate these headwinds and remain the industry leader in renewable development with its scale and track record, an advantage in negotiating project economics relative to peers.”

NextEra Energy stock price forecastNextEra stock

The ongoing NextEra share price sell-off was easy to predict. On the weekly chart above, we see that the stock price formed a double-top pattern at $88.87 on January 2nd, 2022, and September. Since then, the shares have crashed below the neckline of this pattern at $64.43. Worse, the shares have dropped below the 200-week and 50-week moving averages.

The Relative Strength Index (RSI) has moved to the extreme oversold level of 21. Therefore, the stock will likely continue falling as sellers target the key support at $46.35.

The post NextEra Energy stock price oversold: Goldman sees a 40% rebound appeared first on Invezz.

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