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On Monday, Stifel analysts maintained a Hold rating on Custom Truck One Source (NYSE:CTOS) with a steady price target of $5.00. The decision followed the company’s first-quarter 2025 earnings, which fell short of expectations, primarily due to underperformance in the company’s Truck and Equipment Sales (TES) segment. Despite this, rental utilization saw a year-over-year increase to 77.7% in the first quarter, up from 73.3%, signaling enhanced activity within the key Transmission and Distribution (T&D) end market.
Custom Truck One Source’s TES orders showed considerable growth, surging 220% year-over-year to $284 million, attributed to what was described as an easy comparison to the previous year. The annualized average of orders over the last two quarters approximates $1.13 billion, which aligns with the company’s revenue guidance for the TES segment in 2025. InvestingPro analysis shows the company generated $1.81 billion in revenue over the last twelve months, with a gross profit margin of 21.24%. For deeper insights into CTOS’s financial health and growth prospects, InvestingPro offers exclusive access to detailed Pro Research Reports covering 1,400+ US stocks.
However, Stifel analysts have revised their 2025 adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) estimates for Custom Truck One Source towards the lower end of the company’s provided guidance. This adjustment was influenced by several factors: the approximate $5 million EBITDA shortfall in the first quarter, a softer start for TES margins due to some pricing pressure, new tariff-related cost pressures estimated to impact EBITDA by less than $5 million, and a lesser expected benefit from floorplan financing following inventory investments in the first quarter, also estimated to affect EBITDA by less than $5 million.
The report from Stifel reflects a cautious outlook on Custom Truck One Source, with acknowledgement of both the positive trends in rental utilization and the challenges faced in the TES segment and broader financial expectations for the year. The analysts’ reiterated Hold rating and price target suggests a watchful approach to the stock as the company navigates the various pressures impacting its performance.
In other recent news, Custom Truck OneSource reported its first-quarter 2025 earnings, which fell short of expectations. The company posted an adjusted earnings per share (EPS) of -$0.08, missing the forecasted -$0.06. Revenue also came in below estimates at $422 million, compared to the projected $434.49 million. Despite these setbacks, the company reaffirmed its full-year 2025 guidance, expecting total revenue between $1.97 billion and $2.06 billion and adjusted EBITDA between $370 million and $390 million. Custom Truck OneSource continues to focus on strategic investments in its rental fleet, which have shown positive year-over-year improvements in key performance indicators. The company aims to reduce its net leverage to below 3x by the end of fiscal 2026. Analysts have not recently upgraded or downgraded the stock, but the company remains optimistic about its market position and future growth.
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