On Thursday, Baird adjusted the stock price target for Centuri Holdings Inc (NYSE: CTRI), increasing it to $21.00 from the previous $19.00. The firm has kept its Outperform rating on the stock. The move comes amidst a period where Centuri's earnings have fallen short of expectations, yet the company has maintained its guidance, largely due to contributions from storm restoration efforts.
The analyst at Baird noted that the maintained Outperform rating reflects the long-term opportunity they see in the company. Despite the earnings miss, the firm acknowledges the positive impact of a new CEO appointment, which establishes permanent leadership.
Moreover, the company's efforts to save on costs and capital expenditures are seen as beneficial for supporting margins and improving free cash flow conversion.
Centuri's year-to-date backlog growth has been described as weak, with few Municipal Service Agreements (MSAs) renewing. The analyst suggests that this is merely a matter of timing, with expectations for more active MSA renewals in 2025, which could serve as a possible catalyst for the company.
The Baird analyst highlighted Centuri's solid industry reputation and its exposure to industry tailwinds, especially in the Electric sector. However, there is a reduced near-term conviction in the company's recovery from its recent lows. Despite the challenges, the outlook for Centuri remains positive, with the firm emphasizing the company's long-term growth potential in the industry.
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