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On Friday, Bernstein analysts maintained a positive stance on Quanta Services (NYSE:PWR), reaffirming an Outperform rating and a price target of $347.00. Quanta Services, currently trading at $281.16 with a market capitalization of $41.69 billion, outperformed expectations with its fourth-quarter adjusted earnings per share (EPS) of $2.94, surpassing estimates by 12%. The company also issued guidance for fiscal year 2025, projecting an EPS of $10.20 at the midpoint, slightly above consensus estimates by $0.03. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with a P/E ratio of 51.09.
Quanta Services experienced a 13% year-over-year revenue growth in the fourth quarter, maintaining consistent performance with its 5-year revenue CAGR of 13%. The company anticipates a similar 13% revenue increase for 2025, with an 8% organic growth projection. The backlog of total revenue has risen by 15%, supporting the company’s full-year revenue targets. A significant contributor to this growth is the electrical infrastructure business, which is expected to see a 15% increase, backed by a 12-month backlog that has expanded by 18%. InvestingPro data shows the company maintains a GOOD overall financial health score of 2.79, suggesting strong operational fundamentals.
The demand for data centers is having a ripple effect on Quanta’s other services. The company recently secured a multi-year contract to construct a large-scale fiber network for Lumen Technologies, which will facilitate data traffic between ten metropolitan areas in the United States. This contract, booked in the first quarter of 2025, is part of a $1 billion segment for Quanta Services.
Further bolstering its operations, Quanta Services has invested $560 million in the early months of 2025 to acquire two companies. These acquisitions include an Australian engineering and design firm and a US civil contractor that specializes in earthmoving and site preparation. These strategic moves are aimed at enhancing Quanta’s vertical integration and expanding its service offerings.
In other recent news, Quanta Services reported its fourth-quarter 2024 earnings, delivering an adjusted EPS of $2.94, which exceeded analyst expectations of $2.62. However, the company’s revenue came in at $6.55 billion, slightly missing the forecasted $6.61 billion. Despite the revenue miss, Quanta Services achieved a record free cash flow of $1.6 billion for the year. The company has projected continued double-digit growth in both revenue and EBITDA for 2025, supported by significant capital expenditures from utilities and technology sectors. Analyst firms, including BofA Securities and Roth/MKM, have shown confidence in Quanta Services, with BofA raising its price target to $368 and maintaining a Buy rating, while Roth/MKM initiated coverage with a Buy rating and a $350 target. The firm’s backlog has reached a new high of $34.5 billion, reflecting strong demand, particularly in the Renewables sector. Quanta Services’ strategic acquisitions and focus on data center infrastructure and AI-related grid investments position the company favorably for future growth.
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