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Tuesday, shares of Stantec Inc . (NYSE:STN:CN) (NYSE: STN) saw their price target increased by BMO Capital Markets from Cdn$145.00 to Cdn$150.00, while the firm reaffirmed its Outperform rating on the stock. BMO Capital’s analyst, Devin Dodge, provided insights into the rationale behind the price target adjustment, citing several key factors expected to contribute to Stantec (TSX:STN)’s growth. According to InvestingPro data, WSP maintains a "GREAT" overall financial health score of 3.0 out of 4.0, supporting the positive outlook.
According to Dodge, Stantec, along with Waste Connections Inc . (NYSE:WCN) and WSP Global Inc. (WSP), remains a top pick within the Canadian Industrials sector. The analyst’s optimism is partly due to Stantec’s robust backlog, which is expected to enable more than 7% organic net revenue growth in 2025. This strong backlog is seen as providing clear visibility into the company’s future performance. WSP has demonstrated strong growth momentum, with revenue increasing by 12.44% over the last twelve months.
The potential for improved profitability was also highlighted, with Dodge noting that there is room for Stantec’s adjusted EBITDA margins to increase. Furthermore, the analyst suggests that the company’s estimates and guidance for 2025 may be on the conservative side, indicating room for positive surprises in Stantec’s financial results. InvestingPro analysis reveals an impressive gross profit margin of 94.52%, suggesting strong operational efficiency. For deeper insights into WSP’s financial metrics and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro.
Recent strategic tuck-in acquisitions have also contributed to Stantec’s growth, increasing the company’s headcount by approximately 5%. These acquisitions are part of Stantec’s ongoing growth strategy, and the company is noted to have an active mergers and acquisitions pipeline. The analyst’s comments underscore the fact that Stantec has sufficient capital, referred to as "dry powder," to continue funding these deals independently.
Stantec’s strategic moves and strong market position have led BMO Capital Markets to maintain a positive outlook on the company’s stock, as reflected in the upgraded price target and the continued Outperform rating.
In other recent news, WSP Global Inc. reported strong financial results for the fourth quarter of 2024, with a notable 25.23% increase in revenue, reaching $4.7 billion. The company also saw a 21% rise in adjusted EBITDA, amounting to $634 million, and a significant boost in free cash flow, which more than doubled from the previous year to $885 million. WSP Global’s full-year revenue totaled $16.2 billion, reflecting a solid organic growth rate of 7.5%. The company has ambitious targets for 2025-2027, aiming to increase net revenue by 40% and adjusted EBITDA by 50%. Additionally, WSP Global completed 16 strategic acquisitions, including Power Engineers, which reported a 16% organic growth in net revenue in Q4. The company has a robust backlog of $15.6 billion, representing 10.9 months of revenue. Despite challenges in the Asia-Pacific region, WSP Global remains focused on optimizing its operations to improve margins.
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