BMO Capital analyst James Thalacker downgraded NextEra Energy Partners (NEP) to Market Perform from Outperform with a price target of $18, down from $26. The firm cites the potential for persistently higher rates and the negative impact on both yield-oriented names and especially renewable-exposed stocks for the downgrade. BMO believes NextEra Energy Partners will have to cut its distribution more aggressively to be largely self-funding with excess debt capacity facilitating modest distribution growth in the near term with organic development opportunities growth contingent on a cost of capital improvement. It sees the company cutting its distribution by 65%.
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