A twin downgrade from a researcher put the stock of NextEra Energy (NEE -1.26%) and the units of its yieldco NextEra Energy Partners (NEP -3.19%) in the bear cave on Thursday. Both saw pronounced declines with Partners taking the worst of it -- the yieldco's unit price closed the day 12% lower, while NextEra Energy sank by 5%.

The double cut hurt

The researcher in question was Seaport Global Securities' Angie Storozynski. She reduced her recommendation on both NextEra Energy and NextEra Energy Partners to sell from the previous neutral. Storozynski's price targets on the two securities are $44 and $15.50 per share, respectively.

The analyst's driving concern with NextEra Energy is the quality and sources of its earnings, which make its valuations much less attractive -- Storozynski said they leave the stock priced at a 41% P/E premium to other electric utility stocks. She also cited the company's short-term debt load as being a factor behind the move.

As for NextEra Energy Partners, she wrote that she doubts the partnership -- which is a publicly traded subsidiary of NextEra Energy -- will be able to maintain its recent growth in unitholder distributions. A great attraction of a yieldco is those distributions, so any slowdown in their growth might lead to a sell-off. The analyst wrote that she fully expects a significant cut in Partners' distributions by the end of 2024.

Recent sales won't stop payout growth erosion

Storozynski's rather critical pair of notes on the NextEra relatives comes only a few days after Partners announced it is selling its STX Midstream natural gas pipeline network for slightly under $1.82 billion to Kinder Morgan. In her view, while the deal has a juicy price tag, it won't help the company maintain its recent levels of distribution growth.