On Tuesday, Citi updated its outlook on MasTec (NYSE: NYSE:MTZ), increasing the price target to $150.00 from $122.00 while reaffirming a Buy rating for the stock. The adjustment reflects an expectation of continued improvements in the company's end markets.
The new price target is based on a projected adjusted earnings per share (EPS) multiple of approximately 27 times the forecasted 2026 adjusted EPS of about $5.55. This estimate represents an upward revision from the previously utilized adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2025.
Citi anticipates that MasTec's Communications segment will see a significant positive turn in margins later in 2024. This outlook is partly due to the company's recent contract wins with AT&T (NYSE:T) and the potential for increased spending on wireline infrastructure fueled by Broadband Equity, Access, and Deployment (BEAD) program funds.
Despite a cautious stance on the margin progression in MasTec's Clean Energy segment, Citi expects earnings growth to continue. The forecast is supported by a strong backlog, unrecorded limited notice to proceed activities, and the resolution of challenges faced by the Infrastructure and Energy Alternatives (IEA).
Citi also notes potential in MasTec's data center opportunities, which could lead to significant backlog and revenue conversion over time. The firm appreciates MasTec's market positioning and offerings, including its civil and power services, as well as the company's recent discussions with customers about telecommunications opportunities.
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