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On Wednesday, Stifel analysts revised their outlook on Ameresco (NYSE:AMRC) shares, reducing the price target significantly to $18.00 from the previous $34.00, while still recommending a Buy. The adjustment follows Ameresco’s stock plunge of 35.6% on Friday, which starkly contrasted with the S&P 500’s gain of 1.6% on the same day.
The decline in Ameresco’s shares was triggered by the company’s fourth-quarter 2024 adjusted EBITDA, which, excluding a $38 million gain, amounted to approximately $49.2 million. This figure fell short of Stifel’s projection of $76.3 million, largely due to weaker than expected margins in the Projects segment. Additionally, the company’s guidance for adjusted EBITDA in 2025 came in 9% below Stifel’s initial forecast at the midpoint. The company operates with a significant debt burden, showing a debt-to-equity ratio of 2.23, though its current ratio of 1.46 indicates adequate liquidity to meet short-term obligations.
Stifel’s analysis indicates that the lowered guidance accounts for potential risks associated with the Projects business. The firm highlighted that federal projects could see changes depending on how the new administration chooses to allocate funding. Despite these challenges, Stifel noted positive factors that could bolster Ameresco’s performance in the upcoming year. Growth prospects in Europe, the full-year contribution from Energy Assets deployed in 2024, and the anticipated deployment of 100-120 MWe of Energy Assets are expected to drive growth in 2025 and enhance the company’s recurring EBITDA stream.
In their commentary, Stifel analysts stated, "We are maintaining our Buy rating and lowering our target price to $18 from $34 to reflect lower estimates and the uncertain near-term outlook." This revised target price reflects a more cautious stance due to the current uncertainties, yet Stifel continues to see Ameresco as a viable investment option.
In other recent news, Ameresco reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an EPS of $0.88 against the projected $0.78. The company achieved a revenue of $533 million, slightly above the anticipated $523.61 million, marking a 21% increase year-over-year. Despite these positive results, UBS downgraded Ameresco’s stock from Buy to Sell, with a significant reduction in the price target from $37.00 to $8.00, citing potential risks to the company’s adjusted EBITDA guidance for 2025. UBS analyst William Grippin highlighted concerns over federal projects, which constitute 20-30% of Ameresco’s revenue, as a factor influencing the downgrade.
On a different note, Craig-Hallum adjusted its price target for Ameresco to $34 from $40, while maintaining a Buy rating. The firm pointed out Ameresco’s guidance for 2025, which fell below market expectations, as a reason for the adjustment. Despite this, Ameresco’s contracted Project backlog has nearly doubled in the past two years, reaching $2.5 billion, with overall revenue visibility at a record $9.5 billion. Craig-Hallum’s analysis suggests confidence in Ameresco’s long-term outlook, emphasizing the company’s substantial visibility in multi-year contracts.
Ameresco’s full-year revenue increased by 29%, reflecting robust operational performance and strategic project expansion. The company set a revenue guidance of $1.9 billion for 2025, with plans to place 100-120 megawatts of energy assets into service. These developments indicate ongoing challenges and opportunities for Ameresco as it navigates the evolving landscape of federal contracting and clean energy.
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