NextEra Energy’s (NYSE: NEE) stock price is in freefall as the demand for clean energy shares took a nosedive. Shares are plummeting for the third consecutive day and are currently at their lowest point since May 2020, trading at $51.44. This represents a 42% drop from its peak in 2022.
NextEra Energy stands out as a prominent player in the utility sector, boasting a market capitalization of $107 billion. The company provides reliable energy to millions of American homes from diverse sources, including wind, solar, nuclear, battery storage, and natural gas.
The freefall in NextEra’s stock value underscores the formidable challenges confronting companies operating in the wind and solar sectors. For instance, several American governors recently voiced concerns to the Biden administration about the wind industry’s future. Danish clean energy giant Orsted is contemplating an exit from the American market. In addition, Siemens Energy, the leading wind turbine manufacturer, has also been in dire straits, emerging as the worst-performing stock on the DAX index.
The ongoing freefall in NEE stock gained momentum following NextEra Energy Partners’ revision of its growth forecasts for the year, leading to a cut in its full-year run rate and adjusted EBITDA. Consequently, JP Morgan and Oppenheimer have downgraded their outlook on the company.
The primary concern looming over NextEra Energy, Inc. (NYSE: NEE) is the surge in interest rates, which has made it expensive to execute large-scale projects. Therefore, analysts anticipate that the company’s earnings will continue to face pressure in the near term. Additionally, there are worries that the $13 billion interest rate hedges only provide coverage for this year, although company management asserts that these hedges have more extended durations.
Amidst this turmoil, Goldman Sachs analysts maintain a bullish outlook on NextEra Energy’s stock, retaining their buy rating while adjusting their price target from $83 to $72. If their forecast holds true, this suggests a potential 40% uptick in the share price. Goldman Sachs expressed confidence in the company’s ability to navigate current challenges, stating:
“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 Forecast
The ongoing sell-off of NextEra Energy shares (NYSE: NEE) has been nothing short of anticipated. On the weekly chart above, the stock price formed a double-top pattern at $88.87 in January 2022 and September. Subsequently, the stock broke below the neckline of this pattern at $64.43, with further declines dragging it beneath the 200-week and 50-week moving averages.
The Relative Strength Index (RSI) has plummeted to an oversold level of 21, suggesting that the stock is poised for further declines as sellers target the critical support level at $46.35.