On Monday, Tenaris S.A. (NYSE:TS) experienced a revision in its stock outlook, as the price target was reduced to $43.00 from a previous $49.00, while the overweight rating remained unchanged. The adjustment was made in light of a lowered expectation for the company's 2025 EBITDA.
Piper Sandler, the firm behind the revised forecast, based the new price target on a constant 6.5 times 2025 estimated EV/EBITDA, which takes into account an anticipated $3,716 million EBITDA and a net debt of $1,054 million recorded in the first quarter of 2024. The calculation also factored in 590 million fully diluted shares.
As part of the announcement, the firm also highlighted several risks that could impact Tenaris's performance. These include fluctuations in the oil market, potential capital restraint by Exploration and Production (E&P) companies, levels of Oil Country Tubular Goods (OCTG) inventory, and the potential for material cost inflation.
The adjustment in Tenaris's stock outlook reflects a cautious approach by analysts in projecting the company's financial performance amidst a dynamic and uncertain market environment. The overweight rating suggests that the firm still sees potential in Tenaris's stock, despite the revised expectations.
InvestingPro Insights
Following the recent price target revision for Tenaris S.A. (NYSE:TS), current data from InvestingPro provides additional context for investors monitoring the company. As of the last twelve months as of Q1 2024, Tenaris boasts a market capitalization of $19.59 billion, and its price-to-earnings (P/E) ratio stands at a competitive 5.55, indicating the stock might be undervalued compared to industry peers. The company's PEG ratio, a metric that accounts for growth, is notably low at 0.47, suggesting potential for growth at a reasonable price.
While revenue saw a year-over-year increase of 4.67%, the quarterly revenue growth experienced a decline of 16.89%. This could reflect the market's dynamic nature, as noted by analysts, and warrants attention for future performance trends. Despite this, Tenaris has maintained a robust gross profit margin of 41.63% over the last twelve months. Furthermore, investors may find the dividend yield of 4.73% particularly attractive, especially considering the substantial dividend growth of 135.29% within the same period.
For investors seeking a more comprehensive analysis, InvestingPro offers additional insights, including an "InvestingPro Fair Value" estimate of $43.51, which is slightly above the revised analyst price target of $43.00. This could imply a potential undervaluation of Tenaris's stock. Investors can also find more than PRONEWS24 additional "InvestingPro Tips" to further inform their investment decisions. Utilizing the promo code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights.
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