On Friday, Roth/MKM reduced the price target for Altus Power (NYSE:AMPS) to $4.50 from the previous $5.00, while still recommending the stock as a Buy. The adjustment follows Altus Power's second-quarter results, which fell short of expectations, and a downward revision of its 2024 outlook due to the projected pace of asset additions. The company has concluded its development review and is honing its strategy to leverage the synergy between CBRE's client base and Altus Power's strong presence in key markets.
The management of Altus Power reaffirmed its compound annual growth rate (CAGR) forecast of 20-30% for megawatt (MW) growth from 2023 to 2026. However, it is anticipated that the newly refined approach may require time to result in increased deployment rates. In response to these developments, Roth/MKM has lowered its own estimates and subsequently reduced the price target for Altus Power's shares.
Altus Power's strategic refinement aims to capitalize on the convergence of CBRE's client relationships with its own market strengths. This targeted approach is part of the company's broader effort to enhance its asset development and deployment initiatives.
Despite the reduction in the price target, Roth/MKM maintains a positive outlook on Altus Power's stock. This sentiment is based on the current pullback in the stock's price, suggesting that the firm sees potential for recovery and growth despite the near-term challenges outlined in the company's revised guidance.
In other recent news, Altus Power has reported significant growth in its second quarter of 2024. The company announced a 13% increase in quarterly revenue, reaching $52.5 million, and a slight rise in adjusted EBITDA to $31.2 million.
Despite facing utility and interconnection delays, Altus Power remains optimistic about its long-term growth, maintaining a three-year guidance of 20% to 30% CAGR on megawatt growth. The company has revised its full-year 2024 revenue guidance to range between $196 million and $201 million, and adjusted EBITDA guidance to $111 million to $115 million.
InvestingPro Insights
Altus Power's current market dynamics and financial health, as reflected in real-time data from InvestingPro, present a mixed picture for investors. The company's market capitalization stands at $564.36 million, indicating a moderate size within its sector. Notably, Altus Power's revenue has experienced a substantial growth of 49.49% over the last twelve months as of Q1 2024, which aligns with the company's focus on growth and expansion. This is further supported by a gross profit margin of 79.22%, showcasing the company's ability to maintain profitability on its core operations.
However, the stock has faced significant headwinds, as evidenced by a 45.02% decline in price over the last six months. This could be seen as a potential entry point for investors, in line with Roth/MKM's positive outlook for recovery. It's important to note that Altus Power is trading near its 52-week low, with a price 41.41% of its 52-week high, which may suggest undervaluation relative to its past performance.
InvestingPro Tips highlight that Altus Power operates with a significant debt burden and may have trouble making interest payments on its debt, which could be a concern for investors. On a more positive note, analysts anticipate sales growth in the current year and predict the company will be profitable this year. For those considering a deeper analysis, InvestingPro provides additional tips to help guide investment decisions.
For readers interested in a more comprehensive analysis, there are over 10 additional InvestingPro Tips available, which can offer further insights into Altus Power's financial health and market position. These can be accessed through the InvestingPro platform at https://www.investing.com/pro/AMPS.
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