On Monday, Jefferies analyst Julian Dumoulin-Smith adjusted the price target for Ameresco (NYSE:AMRC), a leading clean technology integrator with a market capitalization of $1.2 billion, reducing it to $23.00 from the previous $28.00. Despite the change in the price target, the firm maintained a Hold rating on the stock. According to InvestingPro data, the stock has seen significant volatility, with a 17.4% decline over the past six months, though analyst targets suggest potential upside with a high target of $43.
Dumoulin-Smith expressed concerns about Ameresco's upcoming fourth-quarter results, predicting that they might align with the lower end of the company's guidance. There is also a possibility that the adjusted earnings per share (EPS) could fall short, depending on when tax benefits are realized. InvestingPro analysis reveals that while the company maintains profitability with a last twelve months EPS of $1.00, it's currently trading at a P/E ratio of 22x and is experiencing rapid cash burn, which could impact future performance. The analyst does not foresee a shift in management's long-term targets, even though there was an increase in Energy Assets additions in 2024. He anticipates that Ameresco might decrease megawatt (MW) additions in 2025 to return to more normalized levels.
The report highlighted that lower D3 Renewable Identification Number (RIN) prices are expected to create challenges for Ameresco. These prices are anticipated to affect the company's financial projections, with a forecasted decrease in fiscal year 2025 EBITDA by 2% and EPS by a significant 17%. Despite these challenges, InvestingPro data shows the company has maintained strong revenue growth of 32.7% over the last twelve months, though it operates with a significant debt burden, as indicated by a debt-to-equity ratio of 2.42. Get access to 13 additional ProTips and comprehensive financial analysis through InvestingPro's detailed research reports.
Ameresco has been recognized for its efforts in providing innovative renewable energy solutions. The company's focus on long-term sustainability and growth in the clean energy sector remains a key aspect of its business strategy, despite the near-term headwinds identified by Jefferies. With an InvestingPro Financial Health Score rated as 'FAIR' and analysts anticipating continued sales growth, investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Investors and stakeholders in Ameresco will be closely monitoring the company's fourth-quarter results to gauge the impact of the factors outlined by Jefferies on the company's financial performance. The revised price target reflects the research firm's current outlook on Ameresco's stock, taking into account the potential challenges it faces in the immediate future.
In other recent news, Ameresco reported a significant Q3 growth, surpassing its annual guidance with a revenue and adjusted EBITDA increase of over 40%. The company added 42 megawatts of energy assets, reaching a milestone of 2,000 megawatts. This robust growth led to a 22% increase in the project backlog, now at $4.5 billion, and a 56% rise in the contracted backlog, now standing at $1.9 billion.
Key projects, including a battery energy storage system in Silicon Valley and a geothermal infrastructure project in Louisiana, played a significant role in Ameresco's financial success. The company maintained its 2024 guidance and expressed optimism about future growth, despite potential policy changes and supply chain challenges.
Ameresco reported a 49% increase in total revenue to over $0.5 billion and a 44% increase in adjusted EBITDA to $62.2 million. The company has a healthy balance sheet with $114 million in cash and a debt-to-EBITDA ratio of 2.8 times. Amid these developments, Ameresco is also expanding its operations in Greece and Italy to meet the growing demand for solar projects.
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