On Monday, MasTec, Inc. (NYSE:MTZ) received an upgrade from a Craig-Hallum analyst from a Hold to a Buy rating, with a new price target set at $96. The infrastructure construction company, which specializes in segments such as Clean Energy and Communications, has shown a stabilized outlook with expectations for growth across its business sectors.
The upgrade comes after MasTec reported solid fourth-quarter results and provided guidance for 2024 that aligns with current market expectations. The company has seen several quarters of negative estimate revisions, but now anticipates broad-based growth. The analyst's optimism is reflected in the increased price target, which is based on a 9x EV/EBITDA multiple on the projected 2025 EBITDA of $1.111 billion.
MasTec's Clean Energy sector is expected to continue its double-digit growth in 2024, with a reacceleration anticipated beyond the seasonally slower first quarter. This growth is supported by the ongoing construction of renewable energy infrastructure. Additionally, the successful integration of the IEA acquisition has bolstered management's confidence in reaching a revenue target of $5 billion, up from just shy of $4 billion in 2023.
In the Communications segment, management has highlighted strong momentum with a major customer, AT&T. MasTec expects this relationship to ramp up in the second half of the year, contributing to double-digit top-line growth for the segment in 2025.
The company is set to benefit from an expanded scope and geographic reach of its core wireless work, following AT&T's strategic decision to consolidate vendors and its recent announcement to swap out Nokia (HE:NOKIA) equipment for Ericsson (BS:ERICAs) over the next five years, providing a multi-year tailwind to MasTec's wireless business.
InvestingPro Insights
Following the upgrade from Craig-Hallum, MasTec, Inc. (NYSE:MTZ) has shown promising signs in its financial metrics and market performance. According to real-time data from InvestingPro, MasTec's market capitalization stands at $6.83 billion. Despite a challenging past in profitability with a negative P/E ratio of -131.71, the company's revenue growth remains robust, with a 22.68% increase in the last twelve months as of Q4 2023. This growth trajectory is consistent with the analysts' anticipation of sales growth in the current year, an InvestingPro Tip that aligns with the company's guidance for 2024.
Investors have also witnessed strong returns, with a price total return of 17.67% over the last week, and an impressive 31.84% over the last three months. These figures suggest that investor confidence in MasTec may be growing, as reflected in the recent analyst upgrade. However, the InvestingPro Tips highlight that the stock is currently in overbought territory based on the Relative Strength Index (RSI), which could indicate a need for caution among potential investors.
For those considering adding MasTec to their portfolios, it could be valuable to explore the comprehensive list of InvestingPro Tips available at https://www.investing.com/pro/MTZ. Currently, there are 12 additional tips listed, providing deeper insights into the company's financial health and market position. To further enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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