Earnings Update: Here's Why Analysts Just Lifted Their Quanta Services, Inc. (NYSE:PWR) Price Target To US$238
Shareholders of Quanta Services, Inc. (NYSE:PWR) will be pleased this week, given that the stock price is up 11% to US$234 following its latest annual results. It was a workmanlike result, with revenues of US$21b coming in 3.2% ahead of expectations, and statutory earnings per share of US$5.00, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Quanta Services
Following the latest results, Quanta Services' 15 analysts are now forecasting revenues of US$22.6b in 2024. This would be a decent 8.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to swell 19% to US$6.10. Before this earnings report, the analysts had been forecasting revenues of US$22.1b and earnings per share (EPS) of US$6.25 in 2024. So it's pretty clear consensus is mixed on Quanta Services after the latest results; whilethe analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.
The analysts also upgraded Quanta Services' price target 9.6% to US$238, implying that the higher revenue expected to generate enough value to offset the forecast decline in earnings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Quanta Services at US$275 per share, while the most bearish prices it at US$165. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Quanta Services' past performance and to peers in the same industry. It's pretty clear that there is an expectation that Quanta Services' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 8.2% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 7.1% annually. Factoring in the forecast slowdown in growth, it looks like Quanta Services is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also upgraded their revenue forecasts, although the latest estimates suggest that Quanta Services will grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Quanta Services going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Quanta Services you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
