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Investing.com -- Goldman Sachs has adjusted its ratings for two players in the U.S. energy services sector, upgrading MasTec (NYSE:MTZ) to Buy while downgrading MYR Group (NASDAQ:MYRG) to Neutral.
While both companies are expected to benefit from robust utility spending, Goldman Sachs sees stronger potential for estimate revisions at MasTec due to significant new pipeline construction opportunities.
According to Goldman Sachs, MasTec is poised for a "strong backlog increase" as a leading pipeline contractor in the U.S., with seven new pipelines recently receiving final investment decisions (FID).
The firm now estimates a "run rate revenue of ~$2.5 bil for the pipeline segment through 2030," an increase from their previous assumption of ~$2.0 bil.
Given that Pipeline Infrastructure is MasTec’s "highest EBITDA margin segment," Goldman Sachs has revised its EBITDA estimates to be "+2%/+8%/+3% above FactSet consensus for 2025/2026/2027, respectively."
Additionally, new framework agreements are expected to "drive improved operational visibility and margins in the Clean Energy segment." Goldman Sachs has raised its price target for MasTec to $195.
For MYR Group, Goldman Sachs believes that "at the current price the stock is reflecting a high single digit revenue growth CAGR through 2030, in-line with our broader expectations of utility spending."
While acknowledging MYR Group as a "pure play means of gaining SMID exposure to transmission and distribution," Goldman Sachs indicates a preference to "await incremental visibility around further estimate revision drivers."
The firm has maintained its price target for MYR Group at $168 and for MTZ at $195.