On Friday, KeyBanc increased its price target and maintained an Overweight rating on AECOM Technology (NYSE:ACM) stock. The price target was changed to $105, up from the previous target of $104. The firm's decision is based on a valuation of 13.0 times the estimated 2025 EBITDA.
The analyst at KeyBanc highlighted AECOM's strong presence in key end markets, which include water, transportation, and energy transition. The company's disciplined capital allocation strategy and the strategic shift towards program management and high-end design work were also noted as factors contributing to the improved margin outlook.
KeyBanc's positive stance is further supported by the expectation that AECOM is performing above the midpoint of its guidance. The firm's model predicts an adjusted EPS of $4.48 for the fiscal year 2024, which surpasses the company's projected range of $4.35 to $4.55. This forecast is underpinned by the momentum observed in AECOM's end markets.
The report also indicated that while a formal guidance increase may not be announced with the second-quarter earnings, earnings estimates are likely to trend upward. This expectation is based on the acceleration of project activity and funding in AECOM's core end markets. Additionally, KeyBanc does not foresee a significant impact on the company's performance in the event of a change in the political administration.
InvestingPro Insights
Following KeyBanc's optimistic update on AECOM Technology (NYSE:ACM), real-time data from InvestingPro enriches the outlook on the company's financial health and market performance. AECOM's market capitalization stands at a robust $12.68 billion, reflecting its substantial presence in the construction and engineering sector. Although the company is trading at a high earnings multiple with a P/E ratio of 207.5, which adjusts to 46.08 for the last twelve months as of Q1 2024, this could be indicative of investor confidence in its growth prospects and the strategic shifts mentioned by KeyBanc.
The company's revenue growth is also notable, with a 12.31% increase over the last twelve months as of Q1 2024, and a quarterly growth rate of 15.3% for Q1 2024. This aligns with KeyBanc's analysis of AECOM's performance above the midpoint of its guidance. Additionally, AECOM's gross profit margin stands at 6.54%, which, despite being on the lower side, could reflect the industry's competitive nature and AECOM's strategic focus on high-end design work and program management.
InvestingPro Tips highlight that AECOM is expected to grow its net income this year and has been profitable over the last twelve months. Moreover, the stock generally trades with low price volatility, providing a level of stability for investors. For those interested in deeper analysis, InvestingPro offers additional tips that can be accessed through a subscription. Readers can use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription. With 9 more InvestingPro Tips available, investors can gain a comprehensive understanding of AECOM's market position.
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