On Thursday, KeyBanc Capital Markets adjusted its outlook on shares of Dycom Industries (NYSE:DY), a leading provider of specialty contracting services. The firm increased the price target to $179 from $169 while maintaining an Overweight rating on the stock.
The revision follows Dycom's report of robust revenue growth in the first quarter of the fiscal year, with a notable shift to positive organic growth. The future also looks promising, as the company provided guidance for high single-digit organic growth and continued margin expansion in the second quarter.
KeyBanc's analyst highlighted the potential for sustained revenue and margin improvements as telecommunications companies continue to invest in fiber expansions, either through capital expenditures or joint ventures. Moreover, the anticipated federal funding from the Broadband Equity, Access, and Deployment (BEAD) program is expected to further extend the growth period for Dycom.
Reflecting on the first-quarter results, the guidance provided by the company, and management commentary, KeyBanc has raised its estimates. The firm believes that Dycom remains undervalued in the market, trading at 9.0 times FY26 estimated earnings. The new price target of $179 is based on an increased multiple of 9.5 times FY26 estimated earnings.
The positive outlook from KeyBanc underscores Dycom's strong performance and expected benefits from ongoing investments in fiber infrastructure across the United States.
InvestingPro Insights
Following KeyBanc Capital Markets' optimistic revision of Dycom Industries' price target, current InvestingPro data and tips provide additional context for investors considering the stock. With a market capitalization of $4.86 billion and a P/E ratio (adjusted for the last twelve months as of Q1 2025) at 23.27, Dycom Industries demonstrates its capacity to maintain profitability. The company's revenue growth over the last twelve months as of Q1 2025 was a solid 7.41%, highlighting the robust nature of its business model in a competitive environment.
InvestingPro Tips suggest that Dycom is trading at a low P/E ratio relative to near-term earnings growth, which could mean the stock is undervalued. Moreover, the company has seen a significant return over the last week, with a 13.33% price total return, indicating strong recent performance. These tips, along with 16 additional insights available on InvestingPro, can guide investors to make more informed decisions.
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