What happened

NextEra Energy Partners (NEP -0.89%) stock declined  substantially for the second straight day on Thursday. The company closed the trading session down 18.5%, according to data from S&P Global Market Intelligence.

Management revised its guidance downward on Wednesday, and the new targets prompted big sell-offs of the stock that day. Negative coverage from analysts helped spur continued sell-offs in Thursday's session. 

So what

With its guidance update, NextEra Energy Partners cut its forecast annual dividend per unit distribution growth rate through 2026 to between 5% and 8%. Adding a bit of extra color, the NextEra Energy (NEE -1.36%) subsidiary said that it is targeting a distribution growth rate of 6% across the period. This was a substantial step down from its previous target for an annualized growth rate of 12% to 15% through that period.

While the company said that it expects to grow earnings at an average annual rate of 6% to 8% through 2026, the new distribution and earnings guidance clearly disappointed Wall Street. Following the guidance revision, NEP was hit with negative coverage from analysts on Thursday.

JPMorgan published a note downgrading its rating on the stock from overweight to neutral, and cutting its one-year price target on the stock from $69 per share to $40 per share. Oppenheimer also published a note on NextEra Energy Partners, cutting its rating on the stock from outperform to perform.

Now what

NextEra Energy Partners has exposure to some promising renewable energy trends, and it's trading at much cheaper valuations on the heels of its recent pullbacks. For investors who are confident in the company's long-term prospects, those sell-offs could present a worthwhile buying opportunity.

On the other hand, investors should move forward with the understanding that visibility on future performance has taken a hit. With the company significantly lowering its projected rate of dividend distribution growth, it becomes harder to put confidence in subsequent forecasts. Some of the guidance revision can be attributed to high interest rates, but it's not surprising that Wall Street had a highly negative reaction to the forecast adjustment.