On Tuesday, Wells Fargo (NYSE:WFC) revised its price target for Centuri Holdings Inc (NYSE: CTRI), reducing it to $22 from the previous $29, while retaining an Overweight rating on the stock. The adjustment follows the company's reported revenue downturn, which was more significant than industry expectations.
Centuri Holdings experienced a revenue decline of 16.6%, a steeper drop than the 4.1% forecasted by Wells Fargo and the 5.6% consensus estimate. The decrease was attributed to several factors: a substantial natural gas bid project in the second quarter of 2023 that resulted in a $49 million year-over-year shortfall, reduced volume from existing Master Service Agreements (MSAs) that saw a $33 million year-over-year decrease, and lower volumes from customers engaged in rate cases, contributing to a $31 million year-over-year dip.
Despite these challenges, there is an anticipation of a potential rebound in the second half of the year. However, Centuri Holdings' revenue guidance for the year has been set at $2.5 to $2.7 billion, a notable drop from Wells Fargo's prior estimate of $2.9 billion and the consensus of the same amount.
In other recent news, Centuri Holdings has been the subject of numerous analyst reports. UBS downgraded Centuri Holdings' stock from Buy to Neutral, lowering the price target to $17.00 from the previous $30.00.
This adjustment follows three consecutive quarters of missed earnings expectations. UBS also revised its earnings forecast for Centuri, reducing its estimated EBITDA for the second half of 2025 to the first half of 2026 by 10% to $293 million.
BofA Securities also downgraded Centuri Holdings' stock rating from Neutral to Underperform, lowering its price target to $21.00. This development followed the announcement of CEO Bill Fehrman's departure. Concerns about the company's future performance due to leadership changes have been cited.
In contrast, Wells Fargo initiated coverage on Centuri Holdings, assigning an Overweight rating and setting a price target of $29.00. They recognized the company's significant growth and expansion strategy.
KeyBanc also initiated coverage on Centuri Holdings with a Sector Weight rating, emphasizing the company's involvement in growing sectors such as Electric and Gas Transmission & Distribution, clean energy infrastructure, and 5G. These are the recent developments concerning Centuri Holdings Inc.
InvestingPro Insights
Following the recent price target revision by Wells Fargo for Centuri Holdings Inc (NYSE: CTRI), current InvestingPro data provides additional context to the company's financial landscape. As of the last twelve months leading up to Q1 2024, Centuri Holdings has a market capitalization of approximately $1.39 billion USD. The company's P/E ratio stands at -8.24, reflecting challenges in profitability, which aligns with the company's reported revenue downturn. Additionally, the stock is trading at a Price / Book multiple of 7.04, which may suggest it is valued higher compared to its book value, despite recent performance issues.
Centuri's gross profit margin for the same period was 8.82%, indicating potential room for improvement in operational efficiency. This data point is crucial as the company navigates through its reported revenue challenges. Moreover, with a significant drop in revenue growth of -19.18% for Q1 2024, the financial outlook seems to align with the concerns raised by the reduced volume from Master Service Agreements and other factors cited in the article.
InvestingPro Tips highlight that Centuri operates with a significant debt burden and is not profitable over the last twelve months. However, analysts predict the company will be profitable this year, which may offer a glimmer of hope for investors eyeing a potential rebound. It's also worth noting that the stock is currently in oversold territory according to the RSI, which could interest value investors looking for entry points. For those interested in further analysis, InvestingPro offers additional insights, including 12 more tips for Centuri Holdings. To explore these insights, visit: https://www.investing.com/pro/CTRI and consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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