Source: Investing Published 05/11/2024, 16:44
Susquehanna on Tuesday revised its target price on AES Corp. (NYSE: AES) stock, lowering it to $21 from $24 previously, while maintaining a positive rating on the stock. The revision comes after the company’s third-quarter results released last week, which showed earnings per share beat Susquehanna’s expectations and analysts’ consensus, mainly due to tax credits.
AES Corp. affirmed its full-year earnings per share guidance.
but noted that adjusted EBITDA is expected to be at the lower end of its guidance range. As a result, Susquehanna lowered its adjusted EBITDA estimates for 2025.
citing challenges in the energy infrastructure segment and the sale of AES Brazil.
Despite these headwinds, the company notes that AES continues to benefit from growing demand for data center power, leveraging its broad scale and product mix.
AES Corp. reported adjusted earnings per share for the third quarter of $0.71, beating the Susquehanna estimate of $0.53. The company’s adjusted EBITDA for the quarter, which included tax items, came in at $1.2 billion, up 39% from the same quarter a year earlier. The increase was largely due to contributions from new renewable projects that came online.
Since its second-quarter call in August, AES has completed 1.2 GW of new projects, bringing its total year-to-date to 2.8 GW. This progress is in line with the company’s target of 3.6 GW of new projects for the full year.
In other recent news, AES Corporation reported mixed results for the third quarter.
with earnings beating expectations while revenues came in below expectations. The company reported adjusted earnings per share of $0.71 for the third quarter, beating analysts’ consensus of $0.59. However, revenue came in at $3.29 billion, missing estimates of $3.46 billion.
The company attributed the revenue decline to lower margins in its energy infrastructure segment and severe drought conditions that impacted its renewable energy business in South America. Despite missing the revenue expectations.
AES reaffirmed its fiscal 2024 adjusted earnings per share guidance range of $1.87 to $1.97.
in line with analysts’ consensus of $1.92, expecting results in the upper half of that range.
The company also noted strategic achievements, including securing 2.2 gigawatts of new renewable energy contracts or data center load growth at its U.S. facilities during the quarter. These developments are among the most notable recent achievements for AES Corporation.
InvestingPro Insights
To complement our analysis of Susquehanna, recent data from InvestingPro provides additional context on AES Corp.’s financial health and market performance. The company has a market cap of $10.83 billion, reflecting its significant presence in the energy sector. AES’s P/E of 10.39 indicates a relatively low valuation relative to earnings.
which is in line with Susquehanna’s positive rating despite the price target cut.
InvestingPro’s advice highlights that AES has raised its dividend for 13 consecutive years, demonstrating its commitment to shareholder returns. This is particularly noteworthy given its current dividend yield of 4.53%, which could appeal to income-focused investors. Furthermore, the company’s net income is expected to grow this year.
which could support the positive outlook held by analysts like Susquehanna.
However, investors should note that AES is trading near its 52-week low, with a one-month total price return of -18.61%. This recent weak performance may be related to the challenges in the energy infrastructure sector mentioned in the article. For those considering AES as an investment opportunity, InvestingPro offers 8 additional tips that could provide further insight into the company’s prospects.
