On Friday, DA Davidson maintained a positive outlook on Arcosa (NYSE:ACA) shares, raising the price target to $110 from the previous $105, while reaffirming a Buy rating on the stock.
The adjustment follows a series of in-person meetings with the management of Arcosa that took place last week. During these meetings, a variety of topics were discussed, leading to an update in the firm's estimates.
The newly set price target of $110 reflects a multiple of 12 times DA Davidson's estimated EBITDA for the year 2025. This revision is based on the anticipation of a potential increase in EBITDA, particularly in the company's Engineered Structures (ES) segment, in the second half of 2025. The firm's analysts have adjusted their financial projections to better align with this expected growth trajectory.
Arcosa, a provider of infrastructure-related products and solutions, has been the subject of financial analysis following the recent strategic discussions with its management. The updated estimates by DA Davidson suggest that the company is positioned for an EBITDA ramp-up in the coming years, which is a key metric used by analysts to gauge a company's operating performance.
The firm's statement highlighted the importance of recalibrating their estimates to account for the future financial prospects of Arcosa. The analyst noted, "We are updating our estimates which we believe better calibrates for potential 2H/2025 EBITDA ramp, especially in ES."
InvestingPro Insights
Following DA Davidson's optimistic adjustment of Arcosa's price target, real-time data and InvestingPro Tips further enrich the narrative around the company's financial health and future prospects. With a market capitalization of $4.22 billion and a P/E ratio that stands at 29.94, Arcosa appears to maintain a solid valuation in the market. The company's revenue growth of 4.48% over the last twelve months as of Q1 2024, coupled with a notable gross profit margin of 18.95%, underscores its operational efficiency.
InvestingPro Tips highlight that Arcosa operates with a moderate level of debt and has liquid assets that exceed short-term obligations, indicating a strong balance sheet. Analysts have revised their earnings upwards for the upcoming period, which aligns with DA Davidson's positive stance. Furthermore, the company has delivered a strong return over the last month, with a 12.94% total price return, and analysts predict Arcosa will be profitable this year, having already been profitable over the last twelve months. These insights suggest that the company is not only managing its finances well but is also garnering increasing confidence from market analysts.
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