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On Wednesday, Jefferies analyst Julian Dumoulin-Smith adjusted the price target for Ameresco shares, listed on the New York Stock Exchange (NYSE:AMRC), to $10.00, a decrease from the previous target of $13.00. The stock, currently trading at $9.58, has fallen over 70% in the past six months and is near its 52-week low. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, despite the challenging market conditions. The firm maintained a Hold rating on the stock.
Dumoulin-Smith’s report highlighted several factors influencing the new price target, including potential challenges Ameresco may face in the current quarter. The company’s legacy Projects and burgeoning Energy Assets segments could experience double exposure due to a combination of factors. These include a project cancellation in the fourth quarter, an evolving tariffs landscape, and uncertainties surrounding the Inflation Reduction Act (IRA). InvestingPro data reveals the company operates with a significant debt burden, with a debt-to-equity ratio of 2.24, and faces weak gross profit margins of 14.47%, adding to investor concerns.
The analyst emphasized the importance of Ameresco delivering a stable first quarter without any project cancellations or delays to alleviate concerns regarding its federal exposure. However, Dumoulin-Smith noted that risks persist for the Energy Assets division due to limited visibility at this time. With the next earnings report due on May 5th, InvestingPro subscribers can access over 15 additional exclusive ProTips and comprehensive financial metrics to better assess the company’s outlook.
As a result of these concerns, Jefferies has revised its revenue forecast for Ameresco for the year 2026 and beyond, reducing it by 1-2%. This adjustment reflects the current lack of clarity and the potential impact on the company’s financial performance.
Ameresco, which specializes in energy efficiency solutions and renewable energy projects, will need to navigate these uncertainties to meet the expectations of analysts and investors. The company’s stock price will likely continue to reflect its ability to manage these risks and deliver on its project commitments.
In other recent news, Ameresco reported its fourth-quarter 2024 earnings, achieving an EPS of $0.88, which exceeded the forecasted $0.78. The company also posted a revenue of $533 million, surpassing expectations and reflecting a 21% year-over-year increase. Despite these positive results, Ameresco’s stock faced downgrades from several analyst firms. Baird downgraded the stock from Outperform to Neutral, citing concerns over future earnings per share guidance that fell short of consensus forecasts. UBS also reduced its rating from Buy to Sell, lowering the price target to $8, while highlighting potential risks to the company’s adjusted EBITDA guidance for 2025. Stifel maintained a Buy rating but significantly cut the price target to $18, pointing to weaker-than-expected margins in the Projects segment. Craig-Hallum, meanwhile, adjusted its price target to $34, retaining a Buy rating and noting the company’s record project backlog and substantial revenue visibility. These developments come amidst uncertainties in federal government projects, which significantly contribute to Ameresco’s revenue.
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