Stifel cuts Comfort Systems USA price target to $471 from $577

On Monday, Stifel analysts adjusted their outlook on Comfort Systems USA (NYSE:FIX) shares, reducing the price target to $471 from the previous $577. Despite this change, the firm maintains a Buy rating on the stock. According to InvestingPro data, analyst targets currently range from $440 to $600, with the company maintaining a "GREAT" financial health score of 3.23 out of 5. The revision follows Comfort Systems USA’s fourth quarter of 2024 performance, which surpassed expectations in terms of revenue and margins in both of its business segments.

The company’s success was attributed to robust execution without the influence of one-time events or significant project completions. Notably, the implied modular revenue saw a significant year-over-year increase of 56%. The total backlog of projects expanded by 16% compared to the previous year, with organic backlog growing by 9%. However, total orders experienced a slight decline of 2% year-over-year.

The Electrical segment of Comfort Systems USA demonstrated considerable strength, with orders rising 62% year-over-year. On the other hand, the Mechanical segment faced a decrease in orders by 12%. This softer performance in Mechanical orders was linked to the timing of modular orders, which are scheduled to continue into 2026, providing extended visibility that remains above normal levels.

Management at Comfort Systems USA also emphasized the robustness of the project pipeline, describing it as "unprecedented levels." This indicates a strong potential for future growth and a healthy stream of projects for the company. The new price target reflects the current assessment of the company’s value, taking into account the latest financial outcomes and market conditions. InvestingPro subscribers can access 12 additional exclusive insights about FIX’s financial health, valuation metrics, and growth potential through the comprehensive Pro Research Report.

In other recent news, Comfort Systems USA reported fourth-quarter earnings that significantly exceeded analyst expectations. The company posted adjusted earnings per share of $4.09, surpassing the consensus estimate of $3.66. Revenue increased by 37.6% year-over-year to $1.87 billion, also beating analyst projections of $1.77 billion. Comfort Systems USA’s backlog grew to $5.99 billion as of December 31, 2024, up from $5.16 billion a year earlier, indicating strong future demand. The company generated robust free cash flow of $171.7 million in the fourth quarter, compared to $148.6 million in the previous year. For the full year 2024, free cash flow reached $743.5 million. President and CEO Brian Lane expressed optimism about 2025, citing a strong backlog and healthy project pipelines. These recent developments highlight the company’s strong performance and positive outlook.

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