Citi has revised its price target for Quanta Services, Inc. (PWR, Financial), lowering it from $366 to $342 while maintaining its Buy rating on the shares. The firm anticipates that Quanta Services' first-quarter financial results, along with other companies in the engineering and construction sector, will meet or surpass market expectations.
Despite the positive outlook for the upcoming results, Citi expresses caution regarding the future. The firm notes that management's forward guidance might reflect increased uncertainty in project activities due to the potential for an economic slowdown. This caution is driven by concerns about the impact of higher input costs, stemming from tariffs, and a broader economic uncertainty that could cause clients to reconsider their project investments and capital expenditure plans.
Quanta Services remains Citi's top investment choice, followed by MasTec, Inc. (MTZ) and KBR, Inc. (KBR). The firm continues to monitor the sector closely as economic conditions evolve, emphasizing the importance of strategic positioning in the face of potential market shifts.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for Quanta Services Inc (PWR, Financial) is $326.32 with a high estimate of $368.00 and a low estimate of $203.43. The average target implies an upside of 15.67% from the current price of $282.12. More detailed estimate data can be found on the Quanta Services Inc (PWR) Forecast page.
Based on the consensus recommendation from 30 brokerage firms, Quanta Services Inc's (PWR, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Quanta Services Inc (PWR, Financial) in one year is $279.00, suggesting a downside of 1.11% from the current price of $282.12. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Quanta Services Inc (PWR) Summary page.
PWR Key Business Developments
Release Date: February 20, 2025
- Revenue: Fourth quarter revenue of $6.6 billion.
- Net Income: $305.1 million attributable to common stock.
- Diluted Earnings Per Share (EPS): $2.03 per share.
- Adjusted Diluted EPS: $2.94 per share.
- Adjusted EBITDA: $737.8 million, representing 11.3% of revenues.
- Free Cash Flow: Fourth quarter free cash flow of $575.4 million; full-year free cash flow of $1.6 billion.
- Total Backlog: $34.5 billion at year-end.
- Acquisitions: Two companies acquired for approximately $562 million in cash and stock.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Quanta Services Inc (PWR, Financial) reported double-digit growth in revenues and earnings for the fourth quarter and full year 2024.
- The company achieved record financial metrics, including a total backlog of $34.5 billion, with renewable energy infrastructure solutions reaching all-time highs.
- Quanta Services Inc (PWR) has produced record revenues in seven of the last eight years, demonstrating consistent profitable growth.
- The company is well-positioned to support clients in the evolving energy and infrastructure landscape, with significant opportunities for grid modernization and energy infrastructure development.
- Quanta Services Inc (PWR) ended the year with ample liquidity and a strong balance sheet, supporting both organic growth and strategic capital deployment.
Negative Points
- There are risks and uncertainties associated with forward-looking statements, which may result in actual results differing materially from expectations.
- The company faces challenges related to the energy transition and the need for large-scale grid modernization, which may require significant investment and adaptation.
- Quanta Services Inc (PWR) must navigate potential regulatory changes and market dynamics that could impact its operations and financial performance.
- The underground utility and infrastructure solutions segment experienced lower margins in 2024, although improvement is expected in 2025.
- The company must manage risks associated with violent weather events and the need for grid hardening, particularly in regions prone to wildfires.
