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On Wednesday, Needham raised the price target for CECO Environmental Corp (NASDAQ:CECO) to $34 from $33, while reiterating a Buy rating on the stock. The adjustment follows CECO’s announcement of first-quarter revenues that surged 40%, a figure significantly higher than the 20% growth anticipated by consensus estimates. With a market capitalization of $787.5 million and trailing twelve-month EBITDA of $54.28 million, the company’s adjusted EBITDA and earnings per share (EPS) also exceeded Wall Street’s expectations, bolstered by robust gross margins of 35.04% and the substantial revenue outperformance. According to InvestingPro analysis, CECO appears overvalued at current levels, though analysts maintain positive outlook with multiple ProTips highlighting growth potential.
CECO Environmental’s bookings continued their upward trend, with orders increasing by 57%, leading to another record backlog. The B-T-B ratio stood at 1.29, indicating a healthy balance between bookings and billings. Profire, a part of CECO, has been performing beyond projections and has been a key contributor to the strong order intake. Despite the uncertain macro-economic climate, CECO has confirmed its revenue and adjusted EBITDA forecasts for the year 2025, with InvestingPro data showing an expected revenue growth of 25% for the year.
The company’s financial results reflect a successful strategy in monetizing its record backlog early in 2025. The robust pipeline for future business shows no signs of diminishing, suggesting continued growth for the company. In light of these positive developments, Needham has revised its estimates upward for CECO for both 2025 and 2026.
CECO Environmental’s strong performance comes at a time when many companies are facing headwinds due to macro-economic uncertainties. The firm’s ability to not only meet but exceed expectations speaks to the strength of its operations and market position, reflected in its healthy current ratio of 1.71 and recent 19.4% one-week return. CECO’s reaffirmed guidance for the remainder of the year provides a clear outlook for investors amidst a volatile economic landscape. For deeper insights into CECO’s financial health and growth prospects, access the comprehensive Pro Research Report available exclusively on InvestingPro, along with 8 additional ProTips and extensive financial metrics.
In other recent news, CECO Environmental Corp. has completed the sale of its Fluid Handling business to May River Capital for approximately $110 million in cash. The divested unit, Global Pump Solutions, included the Dean, Fybroc, and Sethco pump brands and served over 1,500 global customers. This sale is part of CECO’s strategy to align its portfolio with growth opportunities in energy and industrial markets, with proceeds earmarked for debt reduction and strategic growth investments. Additionally, CECO Environmental has appointed Deloitte & Touche LLP as its new auditor, effective February 28, 2025, replacing BDO USA, P.C. This change comes after CECO identified and addressed material weaknesses in its internal control over financial reporting by mid-2024. The Audit Committee has ensured a smooth transition by discussing these issues with both the outgoing and incoming auditors. Deloitte’s engagement is expected to enhance CECO’s financial reporting processes. These developments reflect CECO’s ongoing efforts to strengthen its financial oversight and expand its investment capacity.
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