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On Friday, Goldman Sachs analysts downgraded MYR Group (NASDAQ: NASDAQ:MYRG) stock from Buy to Neutral. The decision comes with an increased price target of $168, up from $145. The stock, currently trading at $164.53, is approaching its 52-week high of $168.88, with InvestingPro data indicating the stock is trading at elevated multiples with a P/E ratio of 69.3x. The analysts project that the transmission and distribution (T&D) segment will grow at approximately 9% compound annual growth rate (CAGR) through 2030, while the commercial and industrial (C&I) segment is expected to grow at around 6% CAGR during the same period.
The analysts noted the absence of long-term guidance and a balanced exposure to both the T&D and C&I markets, which makes incremental drivers of estimates less visible for MYR Group. They believe the stock is likely pricing in expected growth at current levels. Operating margins are anticipated to improve, with T&D margins growing from 8% in 2025 to 11% in 2030, and C&I margins increasing from 5% in 2025 to 6% in 2030.
The management team is expected to focus on work driven by master service agreements in the T&D segment, where industry capital spending is predicted to grow at high single digits annually through 2030. Solar work is currently estimated to be less than 4% of the segment on a run rate quarterly basis, with management maintaining a moderated exposure.
Incremental growth in the T&D segment could potentially be driven by stronger reliability spending in regions of exposure and an increase in larger transmission projects.
In other recent news, MYR Group Inc. reported strong financial results for the first quarter of 2025, surpassing both earnings and revenue forecasts. The company achieved an earnings per share (EPS) of $1.45, significantly exceeding the expected $1.17, while revenue reached $834 million compared to the forecasted $787.66 million. This performance marks a notable achievement for the company, reflecting its strategic initiatives and a robust year-over-year revenue growth of 2.2%. The Commercial and Industrial (C&I) segment was a major growth driver, with revenues rising 14.4% year-over-year. Additionally, MYR Group’s operating cash flow saw a substantial increase, reaching $83 million from $8 million in the previous year.
In the realm of analyst opinions, there were no specific upgrades or downgrades mentioned in the recent developments. However, the company continues to focus on strategic growth, particularly in high-demand sectors such as data centers and clean energy. MYR Group’s management anticipates higher single-digit growth in its core Transmission and Distribution (T&D) segment while targeting a margin range of 7% to 10.5%. The company is also prioritizing organic growth and potential acquisitions. Despite challenges such as potential tariff impacts and inflationary pressures, MYR Group remains committed to its growth strategy, as emphasized by CEO Rick Swartz and CFO Kelly Huntington during their recent earnings call.
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