RBC Capital lifts APi Group stock target to $52, keeps Outperform

On Thursday, RBC Capital Markets updated its outlook on APi Group Corporation (NYSE:APG), increasing the price target to $52 from the previous $45, while retaining an Outperform rating on the stock. The firm’s analyst, Ashish Sabadra, provided insight into the company’s recently detailed growth strategy, which is expected to resonate positively with investors. The stock has shown strong momentum, gaining over 28% year-to-date and currently trading near $46. According to InvestingPro data, six analysts have recently revised their earnings estimates upward, with price targets ranging from $46 to $54.

APi Group’s strategy emphasizes moderate to strong (MSD) organic growth and a transition toward regulatory-driven, higher-margin, recurring revenue streams. These streams come from inspections, services, and monitoring. The company has set new financial goals, known as the 10/16/60+ targets, which aim for over $10 billion in revenues, 16% adjusted EBITDA margins, and a consistent 80 basis points annual margin expansion. Currently, the company maintains a healthy gross profit margin of 31.2% and generates $786 million in EBITDA. InvestingPro’s comprehensive analysis shows the company’s overall financial health score is "GOOD," with particularly strong momentum metrics.

The growth strategy includes a disciplined approach to selecting customers and projects, strategic pricing, and operational efficiency. APi Group’s Elevators segment is identified as a significant growth driver, with a $1 billion opportunity within a $10 billion total addressable market (TAM). This segment is expected to enhance cross-selling activities across the company’s portfolio.

Furthermore, APi Group’s strong free cash flow (FCF) generation and low net leverage are anticipated to support its ability to pursue accretive mergers and acquisitions (M&A). The company also plans to invest in digital capabilities, return capital to shareholders, and achieve mid-teens average net income (ANI) growth through the fiscal year 2028.

The analyst’s commentary sheds light on APi Group’s strategic initiatives and financial aspirations, which underpin the rationale for the updated price target and the continued positive outlook on the company’s shares.

In other recent news, APi Group Corporation reported first-quarter results that exceeded analyst expectations, with revenue reaching $1.7 billion, surpassing the consensus estimate of $1.66 billion. The company also raised its full-year 2025 revenue guidance to between $7.4 billion and $7.6 billion, up from the previous forecast of $7.3 billion to $7.5 billion. Additionally, APi Group increased its adjusted EBITDA outlook to a range of $985 million to $1,035 million. The company’s Safety Services segment experienced notable growth, with revenue increasing by 13.4% year-over-year to $1.27 billion. However, the Specialty Services segment saw a decline of 6.8% in revenue, down to $453 million. In another development, Truist Securities increased its price target for APi Group from $48 to $54, maintaining a Buy rating on the stock. APi Group also announced ambitious financial goals, aiming for over $10 billion in net revenues by 2028, with an adjusted EBITDA margin of 16% or more. Furthermore, the company plans a three-for-two stock split, with additional shares to be distributed in June 2025.

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