On Friday, JPMorgan adjusted its outlook on Altus Power (NYSE:AMPS), reducing the price target to $6 from the previous $7, while still holding an Overweight rating on the company's shares.
The adjustment follows Altus Power's fourth-quarter performance, which reported earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue that fell short of expectations. The underperformance was primarily attributed to unfavorable weather conditions in several of the company's operating regions, which negatively impacted energy production.
The full-year 2024 EBITDA guidance provided by Altus Power also did not meet expectations. However, the investment firm believes that this guidance shortfall is related to the timing of asset deployments and internal investments, rather than any fundamental changes in the quality of the company's assets or its growth prospects. JPMorgan emphasized that Altus Power remains a leading entity in the commercial and industrial (C&I) segment, which is still not fully tapped, and highlighted the company's robust financial position and superior access to capital.
The investment firm reminded investors that Altus Power's business model involves deploying assets that generate earnings over multiple decades. Therefore, short-term fluctuations in the timing of these deployments are seen as having a minimal effect on the long-term earnings potential of the company's assets. In light of the recent financial updates, JPMorgan has revised its fiscal years 2024 and 2025 estimates for Altus Power.
InvestingPro Insights
Altus Power's recent financial performance has prompted a closer look at the company's metrics and future outlook. According to InvestingPro data, Altus Power boasts a market capitalization of $944.4 million, indicating its considerable size within the renewable energy sector. Despite facing short-term challenges, the company shows a strong gross profit margin of 80.9% over the last twelve months as of Q4 2023, which underscores its ability to maintain profitability on its core operations.
InvestingPro Tips highlight that Altus Power operates with a significant debt burden, which is an important consideration for investors assessing the company's financial health. Additionally, analysts anticipate sales growth in the current year, which could signal a potential rebound from the recent underperformance. This aligns with JPMorgan's perspective that the company's long-term earnings potential remains intact despite short-term setbacks.
Investors looking to delve deeper into Altus Power's financials and future prospects can find additional insights with a subscription to InvestingPro. There are currently 12 more InvestingPro Tips available for Altus Power, which can be accessed at https://www.investing.com/pro/AMPS. To enhance your investing strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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