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Investing.com - BMO Capital downgraded Quanta Services (NYSE:PWR) from Outperform to Market Perform on Thursday, while raising its price target to $400.00 from $352.00. The stock, which has delivered a remarkable 59% return over the past year, is currently trading near its 52-week high of $390.10.
The research firm emphasized that the downgrade was "strictly a valuation call" rather than a fundamental concern about the company’s business prospects. This aligns with InvestingPro data showing Quanta trading at a steep P/E ratio of 61.4, suggesting the stock may be overvalued despite its strong fundamentals and GREAT financial health score.
BMO Capital acknowledged that Quanta’s "scale, breadth, and high voltage expertise" differentiates it from typical engineering and construction peers and justifies a substantial premium valuation.
The firm noted its 2026 and beyond estimates for Quanta Services remain above consensus, indicating continued confidence in the company’s long-term growth trajectory.
Despite maintaining a positive view on the "same strong demand drivers" for Quanta Services, BMO Capital does not foresee the same margin expansion potential that would justify further stock appreciation beyond current levels.
In other recent news, Quanta Services has been the focus of several notable updates. Seaport Global Securities initiated coverage on Quanta Services with a Neutral rating, projecting revenue and earnings growth through 2027, highlighting the company’s role in the power supercycle and natural gas expansion. Moody’s affirmed Quanta’s Baa3 rating and revised its outlook to positive, citing strong credit metrics and strategic acquisitions that have diversified its portfolio. Meanwhile, Northland downgraded Quanta Services from Outperform to Market Perform due to valuation concerns, noting the company’s reliance on headcount expansion and acquisitions for growth.
UBS raised its price target for Quanta Services to $413, maintaining a Buy rating, driven by anticipated increases in transmission infrastructure spending, particularly in Texas. Goldman Sachs also raised its price target to $414, emphasizing Quanta’s position as a leading specialty contractor with significant potential in transmission and distribution spending. The analysts at Goldman Sachs noted the company’s long-term prospects in enhancing the U.S. electrical infrastructure. These developments collectively underscore the dynamic landscape in which Quanta Services operates, reflecting varied analyst perspectives on its future trajectory.
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