Is it time to invest in NextEra Energy after the BofA recommendation?

on Oct 29, 2021
  • NextEra Energy shares on Friday declined by 1.22% despite BofA recommending it to investors.
  • NEE is among the top-rated in BofA’s list of the best clean energy stocks.
  • The firm cites this weekend’s Glasgow meeting as the world pushed towards a zero-carbon economy.

On Friday, NextEra Energy Inc. (NYSE:NEE) shares edged lower 1.23% despite being among the top-rated stocks in the Bank of America’s clean energy bets. The firm issued its latest update for energy stocks that could benefit from this weekend’s COP26 (Conference of the Parties’ 26th annual summit) in Glasgow, Scotland. 

The firm cited the meeting as a potential catalyst for clean energy stocks as the world pushes towards a zero-carbon economy. NextEra announced its most recent quarterly results last week beating consensus analyst expectations on non-GAAP earnings whilst missing the revenue forecast.

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NextEra looks expensive

From an investment perspective, NextEra Energy shares trade at a steep P/E ratio of 69.53, making the stock less attractive to value investors. 

In addition, its growth prospects are discouraging, with analysts forecasting earnings per share to fall by more than 23% this year, before rising at an average annual rate of 8.32% over the next five years.

Therefore, it may be best to monitor the performances for the next few quarters before betting on long-term growth.

Source – TradingView

Technically, NextEra Energy shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has rallied closer to the overbought conditions of the 14-day RSI.

Therefore, with shares far from reaching oversold conditions after the recent pullback, investors could target extended declines at about $83.35, or lower at $81.16. On the other hand, $87.76 and $89.25 are crucial resistance levels.

It could be time to sell NEE stock

In summary, although NextEra energy shares are tipped to benefit from this weekend’s climate conference, the stock seems to have rallied closer to the current 52-week highs.

Therefore, given its steep valuation multiples, it could be time for profit-takers to swoop in.

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