Gianni Di Poce sees an upside of roughly 33% for Quanta Services PWR, as it is on the front-lines of modernizing the outdated and decaying U.S. electrical grid.
The average age of installed large power transformers (LPTs) in the U.S. is approximately 38 to 40 years, with 70% of LPTs being 25 years or older, reported the U.S. Department of Energy.
“I am bullish on PWR so long as the stock remains above $132.00 to $134.00,” Di Poce reported in his weekly Benzinga Pro Insider Report. “My upside target is $195.00 to $200.00."
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Quanta’s fastest-growing segment is its renewable energy division, which rose to 22% of revenue so far this year, compared to 13% in 2021, Di Poce reported.
“Quanta has a hefty business backlog, which bodes well for future earnings,” Di Poce wrote. For the company's electric power infrastructure solutions the total amounts to $12.98 billion, and its 12-month backlog increased to $7.19 billion from $6.11 billion from the previous year, he explained.
Last year, Quanta reported revenues of $12.98 billion, and delivered earnings of $485.96 million.
The Houston-based company has a free quarterly cash flow of $306.07 million and a strong share buyback program in effect. From January through October 2022, Quanta repurchased 1,054,122 shares of its outstanding common stock in the open market for $126.8 million, and as of Oct. 31, 2022, Quanta's stock repurchase program authorized additional repurchases of up to approximately $346.0 million of common stock.
From a technical perspective, Quanta is breaking out from a cup and handle formation, suggesting a strong rally is imminent.
In the first three quarters of 2022, Quanta has posted revenues of roughly $12.66 billion and reported earnings of $329 million.
As the company posts its fourth quarter earnings on Feb. 22, 2023, which is typically a strong quarter, this can also be a positive catalyst for the firm.
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