On Tuesday, Susquehanna revised its stock price target for AES Corp. (NYSE: NYSE:AES), reducing it to $21 from the previous $24, while retaining a Positive rating on the stock. The adjustment follows the company's third-quarter results released last week, which showcased earnings per share (EPS) surpassing both Susquehanna's forecast and the consensus, primarily due to tax credits.
AES Corp. confirmed its full-year EPS guidance but signaled that its adjusted EBITDA is anticipated to be at the lower end of its guidance range. Susquehanna has consequently lowered its 2025 adjusted EBITDA estimates, citing challenges in the EnergyInfrastructure segment and the sale of AES Brazil.
Despite these headwinds, the firm notes that AES continues to gain from the increasing demand for data center power, leveraging its extensive scale and diverse product offerings.
The third-quarter adjusted EPS reported by AES Corp. was $0.71, exceeding Susquehanna's estimate of $0.53. The company's adjusted EBITDA for the quarter, which included tax attributes, reached $1.2 billion, marking a 39% increase from the same quarter in the previous year. This boost was largely attributed to the contributions from newly operational renewable projects.
Since the second-quarter call in August, AES has completed the construction of 1.2 gigawatts (GW) of new projects, resulting in a year-to-date total of 2.8 GW. This progress aligns with the company's target of 3.6 GW of new projects for the entire year.
In other recent news, AES Corporation reported a mixed bag of third-quarter results, with earnings exceeding expectations while revenues fell short. The company posted adjusted earnings per share of $0.71 for Q3, surpassing the analyst consensus of $0.59. However, revenue came in at $3.29 billion, falling short of estimates of $3.46 billion.
The company attributed the revenue shortfall to lower margins at its Energy Infrastructure segment and severe drought conditions impacting its Renewables business in South America. Despite the revenue miss, AES reaffirmed its full-year 2024 adjusted EPS guidance range of $1.87 to $1.97, aligning with the $1.92 consensus and expecting results in the upper half of that range.
The company also noted strategic accomplishments, including being awarded 2.2 GW of new contracts for renewables or data center load growth at its US utilities during the quarter. These developments are among the recent highlights for AES Corporation.
InvestingPro Insights
To complement Susquehanna's analysis, recent data from InvestingPro offers additional context on AES Corp.'s financial position and market performance. The company's market capitalization stands at $10.83 billion, reflecting its significant presence in the energy sector. AES's P/E ratio of 10.39 suggests a relatively low valuation compared to earnings, which aligns with Susquehanna's positive rating despite the lowered price target.
InvestingPro Tips highlight that AES has raised its dividend for 13 consecutive years, demonstrating a commitment to shareholder returns. This is particularly noteworthy given the current dividend yield of 4.53%, which may attract income-focused investors. Moreover, the company's net income is expected to grow this year, potentially supporting the positive outlook maintained by analysts like Susquehanna.
However, investors should note that AES is trading near its 52-week low, with a 1-month price total return of -18.61%. This recent underperformance could be related to the challenges in the Energy Infrastructure segment mentioned in the article. For those considering AES as an investment opportunity, InvestingPro offers 8 additional tips that could provide further insights into the company's prospects.
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