Street Calls of the Week
Investing.com -- Mizuho initiated coverage on U.S. engineering and construction companies like MasTec, Quanta Services, and Primoris Services, saying accelerating demand from data centers, electrification and grid upgrades is set to drive a multi-year investment cycle.
The brokerage rated MasTec Outperform with a $215 price target, while assigning Neutral ratings to Quanta and Primoris with price targets of $360 and $112, respectively.
Mizuho said transmission and distribution spending is poised to exceed $230 billion annually by 2027, compared with $174 billion in 2024, with total utility investment topping $1 trillion between 2025 and 2029.
Growth will be led by rising power demand from artificial intelligence and data centers, which the bank projects at 21% compound annual growth, and clean energy and grid modernization at 8–10% through 2028.
Among the three, MasTec was seen as best positioned, with strong cash conversion, pipeline margins above 18%, and a sales mix increasingly weighted toward clean energy and power delivery.
Quanta, the largest player in the sector, benefits from scale and vertical integration but trades at a premium valuation.
Primoris was praised for operational discipline and free cash flow generation but is seen as awaiting catalysts such as acquisitions to drive faster growth.
Margins across the sector remain stable in the high-single to low-double-digit range, Mizuho said, with execution discipline and project mix the key differentiators. Inorganic growth remains central to strategy, with the three companies completing more than $21 billion in acquisitions to date, including $8 billion in the past five years.
Mizuho said risks include fixed-price contract overruns, policy shifts, and integration challenges but maintained its view that electrification and data centers would underpin a durable upcycle.