Tetra Tech Revenue Forecast Revised Upward: Analyst Eyes Sustained Organic Growth And Funding Tailwinds

KeyBanc Capital Markets analyst Sean Eastman reiterated an Overweight rating on Tetra Tech, Inc. TTEK, raising the price target to $200 from $185.

TTEK recently registered Q3 results, recording revenue of $1.21 billion, up 36% Y/Y. 

The analyst expects increasing new-order momentum, accelerating EPS growth and material upward estimate revisions over the NTM+.

The analyst thinks consensus is not fully capturing the fundamental momentum tied to unprecedented water funding growth or the RPS accretion. Management raised FY23 guidance by $0.14, which included a +$0.01 revision for RPS accretion.

Eastman keeps the ~10% organic growth assumption for FY24 as comfortably achievable, with backlog/ ramping new order trends potentially supporting organic growth being sustained or even exceeding the mid-teens level posted in FY23.

Going ahead, the analyst projects 50 bps of annual margin expansion, >100% FCF/NI conversion, and 20%+ ROIC over the next five+ years. 

Eastman also expects meaningful upward estimate revisions to continue over the NTM with multiple funding tailwinds over the coming quarters.

For FY23, the analyst raised revenue estimates from $3.625 billion to $3.699 billion. 

For FY24, the analyst raised revenue estimates from $4.077 billion to $4.101 billion.

Price Action: TTEK shares are trading higher by 1.59% to $168.15 on the last check Friday.