Time to Buy NextEra Energy (NYSE:NEE) and Other Clean Energy Stocks, Says Morgan Stanley

Investors should take advantage of recent weakness to buy select clean technology and renewable energy stocks, including NextEra Energy (NYSE:NEE), Morgan Stanley analysts said on Tuesday, as the bank reassesses the impact of various election results on clean energy.

Analysts led by Andrew Percoco believe that a complete repeal of the Inflation Reduction Act is unlikely even if the Republican Party wins, but it is possible to limit or partially repeal the act, with a special focus on tax breaks for electric vehicles and direct payments.

Morgan Stanley predicts that tax credits for domestic manufacturing, nuclear power, and wind and solar power will enjoy bipartisan support, reducing the risk of repeal regardless of the composition of the administration, with no change in the IRA or the pace of clean energy development under a unified Democratic government or divided government with a Democratic president.

The bank does not expect any changes to its forecasts for the pace of U.S. data center expansion, the nuclear tax credit or the possibility of co-locating data centers with nuclear power plants regardless of the presidential administration, which should bode well for Constellation Energy (CEG) and Vistra (VST).

“Demand for renewable energy is a powerful force,” Morgan Stanley said, believing new sources of demand could outweigh the risks of changes to tax credits for wind, solar and storage, saying it would be a buyer for AES Corp. (AES), First Solar (FSLR) and NextEra Energy (NEE) after recent weak results.

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