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On Friday, RBC Capital Markets adjusted its price target on shares of Tetra Tech (NASDAQ:TTEK), an engineering and consulting firm, bringing it down to $48 from the previous $49. Despite this change, the firm maintained its Outperform rating on the stock. Currently trading at $35.06, with a market capitalization of $9.2 billion, InvestingPro data shows the stock trading at relatively high multiples, with a P/E ratio of 49.6x. The revision comes in the wake of Tetra Tech’s second fiscal quarter results, which surpassed expectations, and an updated forecast for fiscal year 2025 that was raised even as the company removed all work related to the United States Agency for International Development (USAID) and the Department of State (DoS) from its backlog and guidance.
Tetra Tech’s performance in the second fiscal quarter was notable, with the company delivering results that exceeded what analysts had anticipated. The company has demonstrated solid growth, with revenue increasing by 10.8% over the last twelve months. According to InvestingPro analysis, the company maintains a GREAT financial health score of 3.01, supporting RBC Capital’s positive outlook on the stock and its potential for future growth. The firm’s analysts noted that the base business of Tetra Tech appears to be well-positioned for expansion in fiscal year 2026 and beyond.
The adjustment in the price target was attributed to the removal of USAID/DoS related work from Tetra Tech’s backlog and guidance. However, RBC Capital analysts expressed confidence that the rest of Tetra Tech’s operations would likely remain shielded from further cuts related to the Department of Justice’s Environment and Natural Resources Division (DOGE), as there have been no significant disruptions to date.
In their commentary, RBC Capital analysts stated, "Looking ahead, we believe the remainder of TTEK’s business is likely to be relatively insulated from further DOGE-related cuts (no meaningful disruptions to-date) and that the base business remains well-positioned for growth in F2026 and beyond."
The firm’s revised price target of $48, down by $1, reflects these considerations but still signals the analysts’ continued endorsement of Tetra Tech’s stock with an Outperform rating. While the stock has experienced a significant 25.2% decline over the past six months, recent momentum shows a strong 12.6% return in the past week. The company has maintained a consistent dividend policy, raising payments for 11 consecutive years, demonstrating long-term financial stability. For deeper insights into Tetra Tech’s valuation and growth prospects, investors can access comprehensive analysis and 12+ additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Tetra Tech reported its Q2 FY2025 earnings, surpassing analysts’ expectations with earnings per share of $0.33, beating the forecast of $0.30. The company also exceeded revenue projections, reporting $1.32 billion compared to the anticipated $1.04 billion. This performance reflects a strong quarter, with significant contributions from the Government Services Group, which saw a 12% year-over-year revenue increase. Additionally, Tetra Tech secured a new credit facility of $1.5 billion to support future growth.
KeyBanc Capital Markets raised its price target for Tetra Tech to $41.00 from $34.00, maintaining an Overweight rating. This adjustment follows Tetra Tech’s impressive earnings report and the company’s guidance that modestly raises expectations for fiscal year 2025, including a projected 10% core revenue growth. The analyst noted that Tetra Tech’s financial disclosure addressed concerns from USAID project cancellations, paving the way for cleaner growth and improved margins.
Tetra Tech’s outlook for Q3 FY2025 includes net revenue guidance between $1.1 billion and $1.2 billion, with an anticipated adjusted EPS growth of 17% for the full year. The company remains focused on expanding its digital systems practice and capitalizing on opportunities in the water, environmental, and infrastructure sectors. These developments indicate a positive trajectory for Tetra Tech despite recent challenges.
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