NextEra upped at Morgan Stanley as top pick to play renewable energy transition
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NextEra Energy (NYSE:NEE) +3.3% in Tuesday's trading after Morgan Stanley upgraded shares to Overweight from Equal Weight with a $99 price target, raised from $94, seeing the utility as one of the top beneficiaries of the Inflation Reduction Act.
The legislation provides subsidies of up to $3/kg for hydrogen gas produced using methods that do not generate carbon dioxide.
"In addition to being the clear U.S. leader in renewables development, NextEra is the only company we cover with a plan to move to true zero carbon emissions, rather than net zero emissions," Morgan Stanley analyst David Arcaro wrote.
NextEra (NEE) joins several other utilities rated as buys by Morgan Stanley because of favorable ESG characteristics: (AEP), (AES), (CEG), (CNP), (DTE), (EXC), (NRG), (VST).
Arcaro also downgraded Edison International (NYSE:EIX) to Underweight from Equal Weight with a $62 price target, saying the utility is exposed significant physical risk from climate change with wildfire risk that likely will not be reduced for years, the potential for customer loss, and difficulty achieving earnings growth targets.
NextEra Energy's (NEE) dividend is not high, but dividend growth is consistent and high, Leo Nelissen writes in a bullish analysis published recently on Seeking Alpha.