On Friday, Roth/MKM initiated coverage on Quanta Services (NYSE:PWR), a $41.7 billion market cap company specializing in infrastructure solutions for various industries, with a Buy rating and a price target of $350.00. The firm highlighted Quanta Services' significant role in supporting the expansion of electrical infrastructure, which is essential for the growing artificial intelligence and data center markets. According to InvestingPro data, the stock currently trades at $281.16, suggesting potential upside to the analyst target, though current analysis indicates the stock may be trading above its Fair Value.
Quanta Services, an engineering, procurement, and construction (EPC) company, serves electric and gas utilities, renewable energy, communications, and the energy/pipeline sectors. According to Roth/MKM, Quanta is well-positioned to address the critical need for power infrastructure, a factor that is increasingly becoming a bottleneck for the AI and data center theme. InvestingPro analysis confirms Quanta's strong market position, identifying it as a prominent player in the Construction & Engineering industry, with revenue growth of 13.4% over the last twelve months.
The analyst at Roth/MKM pointed out that Quanta Services holds a leading market share in the electric utility and renewables space. This strength in the market is seen as a key advantage for the company as the demand for electrical infrastructure build-out accelerates.
Currently, Quanta Services trades at approximately 16 times the 2026 consensus EBITDA (earnings before interest, taxes, depreciation, and amortization). The firm's price target of $350 represents about 18 times their projected 2026 EBITDA, indicating confidence in the company's growth prospects and financial performance in the coming years. InvestingPro data shows the company currently trades at an EV/EBITDA multiple of 22.5x, with a P/E ratio of 51.1x, suggesting rich valuations. Subscribers can access 13 additional ProTips and a comprehensive Pro Research Report for deeper insights into Quanta's valuation metrics and growth potential.
The coverage initiation by Roth/MKM reflects a positive outlook on Quanta Services' ability to capitalize on the increasing requirements for infrastructure that supports the AI and data center industries. The firm's analysis suggests that the company's market position and financial metrics make it an attractive investment with a strong future trajectory.
In other recent news, Quanta Services reported its fourth-quarter 2024 earnings, showcasing an adjusted EPS of $2.94, which surpassed analysts' expectations of $2.62. However, the company's revenue of $6.55 billion fell short of the anticipated $6.61 billion. Despite this revenue miss, Quanta Services recorded a free cash flow of $1.6 billion for the year, marking a record achievement. The company has also announced a year-end backlog of $34.5 billion, indicating strong future demand, particularly in the renewable energy sector. Bank of America Securities recently raised Quanta Services' stock price target to $368 and maintained a Buy rating, emphasizing the company's robust financial performance and strategic positioning in the energy sector. The firm's fourth-quarter EBITDA of $738 million exceeded consensus estimates by 7%, with notable improvements in the Electric Power margin. Looking forward, Quanta Services anticipates double-digit growth in both revenue and EBITDA for 2025, driven by significant capital expenditures from utilities and technology sectors.
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