Oppenheimer maintains Everus stock Outperform with $60 target

On Wednesday, Oppenheimer reaffirmed its positive stance on Everus (NYSE:ECG) shares, maintaining an Outperform rating and a $60.00 price target. The stock, currently trading at $37.90, has declined 42.36% year-to-date and is hovering near its 52-week low of $37.18. According to InvestingPro data, the company maintains a market capitalization of $1.93 billion. The firm’s analyst highlighted the company’s commitment to its long-term growth prospects, noting that Everus has not experienced any slowdown in its data center activities or other projects. Despite a recent sequential decline in backlog, which the company attributes to its transition to larger contracts and projects, management assures that this is not indicative of a broader slowdown.

Everus has acknowledged the challenge of labor shortages, which has contributed to an anticipated 38% year-over-year increase in its backlog. This growth, however, comes at the cost of an approximate 40% year-over-year decline in its non-backlog book and burn business. Financial metrics from InvestingPro show the company maintains healthy liquidity with a current ratio of 1.79, though it operates with relatively thin gross profit margins of 11.91%. The company is actively seeking to expand its Transmission and Distribution (T&D) exposure due to the segment’s higher margins, more predictable Master Service Agreement (MSA) work, and higher trading multiples.

The analyst’s commentary from Oppenheimer included a direct quote from the firm: "Management emphasized its long-term growth prospects remain unchanged. It has not seen any slowdown in activity across data centers or other jobs. The company reiterated its backlog is lumpy, especially as it migrates to larger contracts/projects, and the recent sequential decline is not related to a slowdown. Labor remains an issue and is why the 38% YoY increase in backlog will come at the expense of a ~40% YoY decline in the non-backlog book and burn business. Management would like to increase its T&D exposure, given higher margins, more predictable MSA work, and higher trading multiples. Maintain Outperform."

This reiteration of confidence by Oppenheimer reflects a belief in the company’s strategic direction and its ability to navigate current challenges while capitalizing on opportunities within the T&D sector. Everus’s focus on larger contracts and projects may contribute to fluctuations in its backlog, but the overall outlook presented by the management and supported by Oppenheimer remains positive.

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