Baird Is Waiting On The Sidelines At MasTec With Neutral Rating

• MasTec, Inc. MTZ has seen a steady decline in its share price over the past year, from the peak of $31.62 on September 24, 2014 to $14.91 on August 25, 2015.
• Andrew J. Wittmann of Baird Equity Research initiated coverage of MasTec with a Neutral rating and a price target of $16.
• Wittman believes that the stock offers exposure to growth markets, while recommending that it would be better to wait for a better risk/reward profile.

Wittman explained that “recent execution challenges across multiple end markets leave risk, particularly against a levered balance sheet, not yet fully captured in Street expectations,” while mentioning that although the weak investor sentiment on and opportunity set of the stock appear attractive, he would prefer to wait for better risk/reward.

According to the Baird report, “MasTec's core markets contain attractive growth opportunities underpinned by increasing wireless data demands, faster/higher-bandwidth needs, an aging electric grid and increased transmission reliability mandates.”

The regulatory environment is also “accommodative,” while supply chain bottlenecks indicate the need for growth or restructuring of the energy delivery system in North America.

In addition, the company’s core operations have lower fundamental exposure than its more diversified E&C peers, to commodity swings, while offers better earnings consistency.

“A lengthy accounting probe, project execution challenges, weather-imposed delays, regulatory malaise and falling crude prices have all pressured results, significantly impacting shares.” Wittman elaborated.

Despite the various guidance cuts, the Street consensus still appears “overly optimistic.” However, Wittman expressed optimism regarding the longer term opportunity for MasTec.