Why Analysts Are Bearish On NextEra Energy Partners (NEP)?

We recently published a list of 5 Stocks That Analysts Are Bearish On. In this article, we are going to take a look at where NextEra Energy Partners, LP (NYSE:NEP) stands against other stocks that analysts are bearish on.

The S&P 500 is up 0.19% while the Dow index has surged up 0.31%. As the broader market booms, there are a few stocks that are lagging the market. Some of these stocks have a bearish outlook and the analysts are adjusting their ratings accordingly.

While the US economy seems comfortably on the path of recovery, certain sectors have more risks associated with them. In other cases, stocks receive a downgrade when they have already run up considerably and analysts do not see more upside despite better earnings and macroeconomic environment. For investors, it is vital to understand why stocks receive a downgrade so they can plan to shift their investments accordingly.

We looked at 5 stocks that analysts are bearish on. To come up with the list of 5 stocks that analysts are bearish on, we looked at stocks that recently received a downgrade and have a market cap of at least $1 billion.

A wind turbine silhouetted against an idyllic sunset, representing clean energy projects.

NextEra Energy Partners, LP (NYSE:NEP)

NextEra Energy Partners, LP (NYSE:NEP) has lost 6% in the last 5 days of trading because of doubts over its growth prospects. Analysts at BMO Capital downgraded the stock from Outperform to Market Perform and cut the stock’s price target to $18 from the previous price target of $26.

The company’s future prospects are clouded for multiple reasons. First, the possibility of the Fed pausing rate cuts is a big threat to NextEra Energy Partners (NYSE:NEP). The company’s market cap has shrunk to just 20% of where it was 2 years ago. Its overleveraged financial position continues to be a threat to the company.

However, investors are wondering if all the negatives are already priced in. Last month, J.P. Morgan published a report on the stock expressing how the firm’s strategic review could bring positive results and that the negatives associated with the company are over-discounted. Once the company gives an update on its strategic review, investors will get more clarity on the company’s future direction.

Overall, NEP ranks 5th on our list of stocks that analysts are bearish on. While we acknowledge the potential of NEP as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as NEP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.