Source: Investing Published Wednesday 28/08/2024, 14:51
Baird, a financial services firm, has revised its outlook for Custom Truck One Source (NYSE: CTOS), lowering its price target to $6.00 from $7.00 previously. Despite this change, Baird maintained Outperform rating on the company’s stock.
According to Baird’s assessment, TES sales revenue accumulated now represents 5.6 months of TES sales revenue over the past twelve months (LTM) as of the second quarter of 2024. This figure represents a significant decrease from the 12.6-month peak observed in the first quarter of 2023 and a decrease from 8.3 months at the end of the year 2023.
The decrease in backlog is attributable to the normalization of previously extended delivery times, which were extended due to supply chain pressures. This normalization indicates that Custom Truck One Source has overcome some of the supply chain challenges that impacted its operations in the past year.
Bird’s revised price target forecast and outperform maintenance indicate that Custom Truck One Source’s positive outlook continues, although next year’s TES revenue outlook is more conservative.
Custom Truck One Source reported important developments including a downward revision of its full-year guidance due to market challenges such as supply chain disruptions and high interest rates. The company’s earnings before interest, tax, depreciation and amortization of $80.1 million fell short of Davidson’s estimates and consensus. Despite these challenges, consecutive revenue growth and adjusted EBITDA growth were noted. and deductions.
Custom Truck One Source has also expanded its credit facility from US$750 million to US$950 million, providing the company with enhanced financial flexibility to support its strategic operations and initiatives. Rehman Darginho, a board member appointed by Energy Capital Partners, resigned from the company, reducing the size of the board from eleven to ten members.
Following these developments, Oppenheimer and Da-Davidson revised their price targets for Custom Truck One Source, impacted by the company’s recent earnings announcement and transportation challenges due to project delays and supply chain issues.
However, despite the current headwinds, the company remains optimistic about its future, expecting an improvement in the latter half of the year and focusing on generating positive free cash flow for 2024.
