NextEra Energy is Monday's IBD Stock Of The Day. The large scale renewable energy utility play pulled back below an official buy point amid the broader market sell-off.
NextEra Energy jumped above its 50-day moving average last week, gaining more than 8% since reporting mixed second-quarter earnings and revenue on July 24. The Florida-based large scale renewable energy developer saw Q2 EPS grow 9% to 96 cents while sales declined 17% to $6.07 billion.
NextEra Energy also reaffirmed 2024 profit guidance of $3.23-$3.43 per share and between 6%-8% growth in 2025, 2026 and 2027. Analyst consensus has 2024 EPS growing 8% to $3.69, according to FactSet.
The company also announced the number of gigawatts that data center customers are demanding is going up. Data centers account for 18% of its gigawatt backlog, according to NextEra. NEE also reported that it signed a deal for 86o megawatts with Alphabet's Google in Q2.
Top hyperscalers — the largest cloud, data center and artificial intelligence providers — include Amazon.com's AWS and Microsoft. Also, Meta and Alphabet.
NextEra Chief Executive Rebecca Kujawa said on the Q2 earnings call on July 24 that utilities are seeing historically high demand.
"We are all very excited to see this growth," Kujawa said. She added that, from a practical standpoint "it will take a couple of years for this to materialize."
Grid Prices Surge
Meanwhile, PJM Interconnection, the largest U.S. electrical grid operator, last week said that 2025-2026 prices for power plants came in at $262.92 per megawatt-day. That's up 800% compared to last year's price of $28.92. The auction secured 135,684 megawatts for June 1, 2025 through May 31, 2026.
The energy mix includes 48% from gas, 21% from nuclear, 18% from coal, 1% from solar, 1% from wind and 4% from hydro, according to PJM.
"The significantly higher prices in this auction confirm our concerns that the supply/demand balance is tightening across the RTO (U.S. regional transmission organization.) The market is sending a price signal that should incent investment in resources," PJM Chief Executive Manu Asthana said in a news release.
It is still unclear how the jump in capacity prices will affect customer bills, according to analysts. Estimates put last year's capacity costs at around 8% of customer electric bills.
NextEra Energy Stock Performance
NEE shares angled down 3.2% to 76.68 during market trade on Monday. NextEra Energy stock is still up slightly in August, on pace for its second consecutive monthly gain and its fifth in the last six months.
The stock has an official 80.47 buy point from a flat base pattern, according to MarketSurge analysis. NextEra Energy has advanced more than 28% in 2024. It is the top stock by market capitalization in the IBD-tracked Utility-Electric Power industry group. The 31 stocks in that group have collectively gained 16% this year, according to IBD data.
Following Q2 earnings in late July, Barclays raised its NextEra Energy stock price target to 75, up from 72, maintaining an equal weight rating.
Morgan Stanley analyst David Arcaro wrote on July 25 that data center deals will "offer higher pricing and returns" in regards to NextEra.
"Incremental demand could come in the 2026-2028 time frame as utilities crystallize their load growth expectations and reassess the need for new generation," Arcaro said. He added that is particularly true in response to rising data center power demand.
NextEra Energy stock has a 96 Composite Rating out of a best-possible 99. Shares have an 88 Relative Strength Rating and an 85 EPS Rating.
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