On Tuesday, Quanta Services (NYSE:PWR), currently trading at $321.98 with a market capitalization of $47.5 billion, received a boost from DA Davidson with an increased price target, now set at $36.00, up from the previous $32.00. The firm maintains a Buy rating on the company's stock.
The adjustment follows a strong financial performance in the third fiscal quarter, with results surpassing expectations due to notable growth in Atlas (NYSE:ATCO) consumption and significant Enterprise Agreement (EA) upside, which included benefits from multi-year licenses. According to InvestingPro data, the stock has delivered impressive returns, gaining over 49% year-to-date.
In addition to the price target change, Quanta Services has also provided updated financial guidance for fiscal year 2025, which has been revised upward. The guidance for the fourth fiscal quarter has been set higher than consensus estimates, yet it is still considered by the analyst to be conservative.
These revisions reflect the company's solid financial standing and promising outlook, supported by a robust 17.4% revenue growth in the last twelve months. However, InvestingPro analysis suggests the stock is currently trading above its Fair Value, with a P/E ratio of 58.2x.
The report also included news of a Chief Financial Officer (CFO) transition at Quanta Services. The company announced changes in its go-to-market investments, shifting towards a stronger enterprise focus. This strategic pivot is expected to better align Quanta Services with evolving business demands.
The analyst's commentary touched upon the current state of AI application among Quanta's customers, noting that most are still in the experimental phase. The deployment of AI at scale seems to be a more distant prospect than management had previously anticipated. Despite this, the firm's stance on the stock remains positive.
DA Davidson's updated price target of $36.00 reflects a confidence in Quanta Services' growth trajectory and market position. The Buy rating stands as an endorsement of the company's potential for continued success in its industry.
In other recent news, Quanta Services has seen its stock price target increased by both DA Davidson and Jefferies due to the company's strong financial performance and growth prospects.
DA Davidson raised the target from $260 to $295, maintaining a neutral rating, while Jefferies set a new target of $299, also with a hold rating. These adjustments were based on Quanta Services' robust third-quarter results, which included revenues of $6.5 billion and a record total backlog of $34 billion.
The analysts at DA Davidson project Quanta Services to benefit from ongoing positive trends in electrical delivery, power generation development, and complex facility construction. Similarly, Jefferies sees potential growth due to the anticipated rise in capital expenditure for Transmission & Distribution and data center trends. Both firms, however, maintain a neutral stance, suggesting that the current stock valuation already reflects these prospects.
In addition to its strong earnings, Quanta Services recently acquired Cupertino Electric, further bolstering its technology and data center capabilities. The company expects revenues between $1 billion and $1.1 billion from this acquisition.
Despite the impact of Hurricanes Beryl and Helene, Quanta Services projects double-digit growth in EPS for 2025 and aims to reach $11 to $12 per share by 2026. The company also anticipates double-digit margins in the renewable segment by 2025.
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