KeyBanc lifts MYR Group stock rating, sets $136 price target

On Friday, KeyBanc Capital Markets raised its rating for MYR Group Inc. (NASDAQ:MYRG) from Sector Weight to Overweight and established a new price target of $136.00. This adjustment reflects the firm’s reassessment of the company’s prospects after a series of investor meetings with MYR Group’s CEO and CFO earlier in the week. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $136 to $164, suggesting significant upside potential from the current price of $111.66.

During the investor meetings, discussions centered around various aspects of MYR Group’s business, including the potential impacts of tariffs, updates on problematic projects, the revenue and margin outlook for the company’s base business, and bid activity across its segments. These topics provided KeyBanc analysts with fresh insights into the company’s operations and financial health. InvestingPro data reveals the company generated $3.36 billion in revenue over the last twelve months, though it operates with relatively thin gross margins of 8.63%.

KeyBanc’s positive stance on MYR Group is partly due to the company’s stock trading at approximately 2.5 times below its three-year average enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio. This valuation presents what KeyBanc perceives as an attractive entry point for investors. InvestingPro analysis shows the stock currently trades at an EV/EBITDA of 17.07x and a P/E ratio of 61.24x, with the stock down nearly 25% year-to-date. For deeper insights into MYRG’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

The upgrade also comes at a time when MYR Group has begun to demonstrate a rising trajectory in its revenue and margin growth profile. This improvement follows a period of execution challenges on select projects in 2024, which the company has now worked through.

KeyBanc’s analyst highlighted the rationale behind the upgrade, stating, "We are upgrading MYRG to OW with a $136 PT to take advantage of the shares trading ~2.5x below their three-year average EV/EBITDA just as the Company is showing an upward ramp in revenue and margin growth profile following execution challenges on select projects in 2024." The new price target and rating reflect KeyBanc’s confidence in MYR Group’s potential for growth and profitability.

In other recent news, MYR Group reported its fourth-quarter 2024 earnings, revealing a significant underperformance compared to market expectations. The company reported earnings per share (EPS) of $0.37, falling short of the projected $0.70, and revenues of $830 million, which missed the expected $886.58 million. Despite these setbacks, the company improved its gross margin to 10.4% from 9.7% year-over-year. Meanwhile, Kansas City Capital upgraded MYR Group’s stock rating from Perform to Outperform, highlighting the company’s strategic position in the energy transition and its improved profitability in the fourth quarter of 2024. The firm set a new 12-18 month price target for MYR Group at $143, suggesting a significant upside potential. Analysts from Kansas City Capital expressed confidence in MYR Group’s potential for a rebound, citing a 16% upside potential for the company’s shares. MYR Group’s backlog increased to $2.6 billion, marking a 2.5% rise from the previous year, indicating a healthy bidding environment and ongoing investments in infrastructure. The company anticipates mid-range operating margins for its Transmission and Distribution (T&D) and Commercial and Industrial (C&I) segments, while focusing on filling the revenue gap left by reduced involvement in clean energy projects.

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