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On Monday, Citi reiterated its Buy rating on AECOM Technology (NYSE:ACM) with a consistent price target of $110.00. Citi's analysis suggests that AECOM is poised to achieve its long-term growth targets, bolstered by its international reach in infrastructure investments and sustainability initiatives. The firm anticipates that AECOM's Americas segment will sustain strong growth, despite potential political and economic risks, thanks to a varied market portfolio.
Citi's outlook for AECOM's International segment is also positive, with expectations of continued revenue growth driven by solid backlog levels. The analyst predicts that award activity could increase around 2025 as demand in the UK and Middle East rebounds.
Citi believes that AECOM's strategic approach and operational performance, combined with a largely variable cost structure, will enable further margin expansion. The firm forecasts an adjusted operating margin exceeding 17% by the end of fiscal year 2026, which is notably higher than that of AECOM's competitors.
The firm's assessment underscores AECOM's potential for long-term earnings visibility and strong cash flow generation. These factors, Citi notes, make AECOM's stock a valuable investment. AECOM's diverse end market and portfolio in the Americas, along with its global presence and strategic focus, are key to its expected success.
In other recent news, AECOM, a global infrastructure consulting firm, reported strong third-quarter results, with an 8% increase in net service revenue and raised earnings guidance for the second consecutive quarter. The company expects a 21% surge in adjusted earnings per share for fiscal year 2024. RBC Capital maintained an Outperform rating on AECOM's stock, citing the firm's effective strategic initiatives and increased infrastructure spending in key markets.
In other developments, AECOM has been appointed as the Lead Designer for the replacement of two aging bridges along the Bronx River Parkway. The project, initiated by the New York State Department of Transportation, is part of a broader effort to improve infrastructure resilience and connectivity in the region. The initiative is partially funded by the Infrastructure Investment and Jobs Act, with over $200 million allocated to the project.
InvestingPro Insights
Adding to Citi's positive sentiment, InvestingPro data underscores AECOM's (NYSE:ACM) robust financial position. The company boasts a market capitalization of $12.93 billion, reflecting its substantial presence in the industry. With a forward-looking P/E ratio of 22.35 and a PEG ratio of just 0.38, AECOM appears to be trading at a reasonable price relative to its near-term earnings growth potential. This is particularly compelling given the company's revenue growth of over 13% in the last twelve months as of Q3 2024, highlighting its strong performance and potential for investors.
Furthermore, AECOM's role as a prominent player in the Construction & Engineering industry is supported by a solid track record of profitability over the last twelve months and a strong return over the past five years. InvestingPro Tips suggest that net income is expected to grow this year, reinforcing the company's upward trajectory. However, it's worth noting that five analysts have revised their earnings downwards for the upcoming period, which may warrant investor caution.
For those looking to delve deeper into AECOM's investment potential, there are additional InvestingPro Tips available, offering a comprehensive analysis of the company's financial health and market position.
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