Market Overview

KeyBanc Downgrades Dycom After Guidance Cut, Awaits Revenue Re-Acceleration

Share:
KeyBanc Downgrades Dycom After Guidance Cut, Awaits Revenue Re-Acceleration

Telecom contractor Dycom Industries, Inc. (NYSE: DY) released a concerning earnings pre-announcement and downward revision to its guidance on Monday. 

The Analyst

KeyBanc Capital Markets' Tahira Afzal downgraded Dycom Industries from Overweight to Sector Weight.

The Thesis

Dycom Industries revised both its second quarter and full fiscal 2019 guidance lower, but the company continues to tout a positive longer-term outlook, Afzal said in the downgrade note. (See the analyst's track record here.) 

Dycom's closest peers continue to signal strength in their activity levels in addition to "fairly consistent" positive supply chain commentary on recent conference calls, the analyst said. 

The company's backlog is up by around 31 percent year-over-year, but the 0.9 times 12-month book-to-bill ratio reflects limited visibility of any revenue ramp in the coming quarters, Afzal said. This may be due to a slower than previously expected upstart on nascent customer programs, but also implies investors can turn bullish again on the stock when there is evidence of revenue re-acceleration, she said. 

The ongoing margin deterioration is consistent with prior woes, including a slower-than-expected program ramp, which drives underabsorption, the analyst said. '

The company's peers managed to maintain their margins in-line with expectations, and "more comfort" is needed on Dycom's margin trajectory given the severity of its guidance cut, according to KeyBanc. 

Price Action

Shares of Dycom Industries were trading up 5.24 percent to $71.66 at the time of publication Tuesday. 

Related Links:

55 Biggest Movers From Yesterday

A Peek Into The Markets: US Stock Futures Point To Higher Wall Street Open

Latest Ratings for DY

DateFirmActionFromTo
Sep 2019MaintainsOutperform
Aug 2019MaintainsBuy
Jun 2019MaintainsBuy

View More Analyst Ratings for DY
View the Latest Analyst Ratings

Posted-In: Contracting Services KeyBanc Capital Markets Tahira AfzalAnalyst Color News Guidance Downgrades Analyst Ratings Best of Benzinga

 

Related Articles (DY)

View Comments and Join the Discussion!
Need corporate guidance data?
Click here to see licensing options.

Latest Ratings

StockFirmActionPT
XLNXCascendUpgrades115.0
CISNBairdDowngrades10.0
WDAYSociete GeneraleUpgrades
BKUDA DavidsonInitiates Coverage On39.0
JDVertical GroupInitiates Coverage On
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Barclays, Macquarie Upgrade Nielsen Holdings On Elliott Management Stake, Likelihood Of Sale

Trying To Catch The Crest Of The Cannabis Wave This Summer