On Monday, MasTec (NYSE: NYSE:MTZ), a prominent infrastructure construction company, received a favorable adjustment from Stifel, with its share price target being raised to $120 from the previous $100, while the firm maintained a Buy rating on the stock. This change follows the company's first-quarter performance for 2024, which surpassed market expectations in terms of revenue and adjusted EBITDA.
MasTec reported a revenue of $2.7 billion, exceeding the consensus estimate of $2.6 billion. The adjusted EBITDA also outperformed projections, coming in at $157 million compared to the anticipated $130 million. This success was largely attributed to strengths in the Oil & Gas (O&G) sector.
Despite a year-over-year 8% decrease in backlog, caused by a reduced focus on industrial projects and the exclusion of over $2 billion of Civil, Energy, and Infrastructure (CE&I) projects under Limited Notice to Proceed (LNTP), the company's outlook for 2024 has been revised upward. The updated guidance is mainly due to a more favorable margin mix, with an increase in O&G revenue forecasts and a decrease in Power Delivery projections.
MasTec is also experiencing growth due to rising demand for data center construction. The company has approximately $200 million of civil data center work in its current backlog, alongside pursuing an estimated $1 billion worth of additional projects.
This is seen as just a fraction of the potential opportunities in the data center sector for MasTec, with expectations of further growth in related areas such as transmission, substation, communications, and clean energy in the upcoming quarters.
Stifel's positive outlook on MasTec's stock reflects the firm's belief in the company's potential for a valuation re-rating within the specialty Engineering & Construction (E&C) space. The stock's performance, which reacted positively to the quarterly results, is viewed as an indication of MasTec's promising position and the potential for continued success.
InvestingPro Insights
Following Stifel's optimistic assessment of MasTec (NYSE: MTZ), InvestingPro data and tips offer additional perspectives for investors considering the stock. With a market capitalization of $7.93 billion, MasTec's adjusted P/E ratio for the last twelve months as of Q1 2024 stands at 27.47, reflecting investor confidence in the company's future earnings potential. This is supported by a revenue growth of 16.24% over the same period, indicating robust top-line expansion.
InvestingPro Tips highlight that analysts expect net income to grow this year for MasTec, which aligns with the company's positive first-quarter performance. However, it's worth noting that four analysts have revised their earnings downwards for the upcoming period, suggesting potential headwinds or a more cautious outlook. Despite this, the stock has shown a strong return over the last three months, with a 47.49% increase, and analysts predict the company will be profitable this year.
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