On Monday, investment firm Piper Sandler increased its price target on shares of TechnipFMC (NYSE:NYSE:FTI), a provider of oil and gas projects, technologies, systems, and services. The new target is set at $34.00, up from the previous $30.00, while the firm retains an Overweight rating on the stock.
The adjustment in the price target reflects a positive shift in the company's earnings estimates, suggesting a stronger performance outlook. TechnipFMC's estimates for future earnings have been adjusted earlier than expected, and the projections for the coming years show a gradual increase. Specifically, the firm anticipates that by 2025, TechnipFMC will achieve a margin of 18% in its Subsea division, with the potential to exceed 20% within the following two to three years.
The raised price target from Piper Sandler is based on approximately 8 times the projected 2026 enterprise value to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio. This projection assumes an EBITDA of $2.0 billion, net debt of $327 million as of the first quarter of 2024, and 446 million fully diluted shares.
The firm's analysis indicates that TechnipFMC's backlog provides visibility into the company's future revenue and earnings. However, the firm also acknowledges risks associated with the oil market's macroeconomic conditions and potential changes in backlog and margin inflection points that may occur later in the business cycle.
InvestingPro Insights
TechnipFMC (NYSE:FTI) has recently garnered increased attention from investment analysts, including Piper Sandler, which has raised its price target for the company. In light of these developments, several metrics and tips from InvestingPro provide a deeper understanding of the company's financial health and stock performance.
InvestingPro Data highlights that TechnipFMC has a market capitalization of $11.4 billion, with a Price/Earnings (P/E) ratio of 64.31. When adjusted for the last twelve months as of Q1 2024, the P/E ratio improves slightly to 52.19. The company's revenue growth for the same period stands at a robust 18.36%, indicating a strong upward trajectory in sales. Additionally, TechnipFMC has experienced an impressive one-year price total return of 83.49%, trading near its 52-week high at 97.6% of the peak price.
Among the InvestingPro Tips, two particularly relevant points for current and potential investors are that analysts predict TechnipFMC will be profitable this year and that the company operates with a moderate level of debt. These insights are critical, as profitability is a key driver of stock performance and a moderate debt level suggests a manageable financial risk profile.
For those interested in a more comprehensive analysis, InvestingPro offers additional tips on TechnipFMC, which can be found at https://www.investing.com/pro/FTI. To access these valuable insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 12 more tips available on InvestingPro, investors can gain a well-rounded view of TechnipFMC's financial landscape and investment potential.
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