On Tuesday, Citi maintained a Buy rating on TechnipFMC (NYSE:FTI), increasing the price target to $34 from $32. The adjustment follows TechnipFMC's strong second-quarter performance, where the company exceeded expectations and raised its future revenue and margin guidance. The firm's FY24 Subsea revenue and margin forecasts have been revised upward, with additional gains anticipated in the initial FY25 Subsea guidance due to improved throughput.
TechnipFMC's recent financial success is attributed to its business model transformation, which initially manifested in substantial order growth and is now positively impacting financial results. Citi has consistently projected higher FY25 Subsea revenues than the consensus, with their estimation standing at $8.6 billion compared to the consensus of $8.4 billion.
There is also potential for margin improvement, as the Subsea 2.0 initiative, which currently represents about 25% of throughput, is expected to double.
Citi's analysis suggests that the positive momentum for TechnipFMC is likely to continue, with the firm maintaining its FY25 EBITDA forecast at approximately $1.7 billion, which is 3% above the market consensus. The increased price target to $34 reflects a revised EBITDA multiple of around 8.5 times for the year 2025.
The company's solid quarter and the optimistic outlook for the coming years indicate that the changes made to its business operations are starting to yield financial benefits. Citi's revised price target represents their confidence in TechnipFMC's growth trajectory and the ongoing impact of its strategic initiatives.
In other recent news, TechnipFMC has seen a series of positive developments. The company reported a record backlog of $13.9 billion in the second quarter of 2024, exceeding the high end of the full-year guidance range for its Subsea division with an adjusted EBITDA margin of 17.7%.
Additionally, the company raised its full-year outlook for Subsea revenue to between $7.6 billion and $7.8 billion, with total company full-year adjusted EBITDA expected to be approximately $1.35 billion.
Benchmark, an independent firm, has raised the price target for TechnipFMC from $30.00 to $35.00, maintaining a Buy rating on the stock. This adjustment follows TechnipFMC's announcement of increased EBITDA guidance for the years 2024 and 2025, along with a reaffirmed commitment to achieving an 18% margin target by 2025.
In other recent developments, TechnipFMC received an investment-grade rating from Fitch, providing access to lower-cost debt. The company also reported successful operations in Guyana, resulting in a favorable market outlook. TechnipFMC's CEO, Doug Pferdehirt, has expressed confidence in the company's trajectory and its ability to deliver on expectations.
InvestingPro Insights
TechnipFMC's (NYSE:FTI) recent performance and Citi's subsequent price target increase to $34 coincide with several positive indicators reflected in InvestingPro data and tips. The company's market capitalization stands at a robust $12.57 billion, and it's trading near its 52-week high, with the price at 99.8% of this peak. With a Price/Earnings (P/E) ratio of 28.08 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 30.55, the company shows a premium valuation compared to historical earnings.
InvestingPro Tips highlight two particularly relevant points for investors considering TechnipFMC's stock: First, analysts are expecting net income to grow this year, which aligns with Citi's optimistic view on the company's financial prospects. Second, there is an anticipation of sales growth in the current year, which could be a driving factor for the company's upward trajectory. Notably, six analysts have revised their earnings upwards for the upcoming period, reinforcing the positive sentiment around TechnipFMC's performance.
For readers looking to delve deeper into TechnipFMC's financials and future prospects, InvestingPro offers additional insights and metrics. To access these and more InvestingPro Tips, visit https://www.investing.com/pro/FTI and consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 11 additional tips available on InvestingPro that could further inform investment decisions.
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