On Tuesday, Piper Sandler adjusted its price target on shares of Ameresco (NYSE:NYSE:AMRC), a leading clean technology integrator, to $35.00 from $37.00, while maintaining an Overweight rating on the company.
The adjustment follows Ameresco's mixed financial update, which included an EBITDA miss and a reduction in the fiscal year 2024 EBITDA guidance by 2% due to cost overruns from Southern California Edison (SCE) projects.
The company reported delays in SCE projects as previously indicated in Edison International's (NYSE:EIX) 10-Q filing. Despite these challenges, Ameresco's adjusted CFO saw a significant quarter-over-quarter increase, adding $1114 million, and the company's corporate leverage decreased slightly.
Ameresco successfully brought a substantial number of assets online during the second quarter, positioning itself to meet deployment guidance. This implies the operation of over 700 megawatts of assets by the end of 2024, which, according to the company, could generate approximately $185 million in run-rate EBITDA. The Street's estimated average EBITDA for 2025 is around $180 million.
The demand in Ameresco's projects segment was robust, reflected in a 2.2 times book-to-bill ratio, leading to a backlog worth $4.40 billion, up 36% year-over-year. The company's bookings over the past six to eight quarters suggest a potential backlog increase to $4.5-$4.7 billion by the end of 2024, which is expected to strongly position Ameresco for the year 2025.
Piper Sandler's reduced price target is based on comparisons, and the firm reiterates its Overweight rating, suggesting that underlying trends may create a favorable outlook for 2025 following the resolution of the SCE project issues.
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