From Investor's Business Daily, September 11:
Stock Of The Day: AI Play Quanta Services Flashes Buy Signal After Oracle Boom
Although a heavy-construction company, Quanta Services (PWR) — the IBD Stock of the Day — is arguably an AI stock.
The company builds electric plants and provides other services for the power grid. The need for artificial intelligence computations is fueling a boom in data centers, which require massive amounts of electricity. In addition, many companies are shifting manufacturing into the U.S., resulting in more factory construction.
That investing thesis got momentum late Tuesday, when Oracle (ORCL) said its backlog for AI-related cloud computing capacity is brimming with orders. The tech stock soared 36%.
In the most recent analyst note, Mizuho initiated coverage of Quanta stock last week with a neutral rating and 360 price target.
Quanta is in a good spot to benefit from a grid and electrification supercycle, with secular growth in data centers, grid modernization and clean energy projects, analysts said. Mizuho's total addressable market forecasts are above consensus, TheFly.com quoted the analysts saying. Within the industry, Mizuho sees Quanta as the scale leader with a premium valuation.
Half of the 34 analysts who cover Quanta have buy or outperform recommendations on the AI stock, and most others have hold ratings, FactSet shows. The average price target is 426.96, implying a 7% upside from today's price around 398.
For the full year, analysts polled by FactSet expect Quanta Services earnings to climb 17.8% to $10.57 a share. Sales are estimated to rise 16.8% to $27.654 billion. Analyst estimates have been trending higher.
Quanta has a market cap of more than $59 billion, the highest of 25 stocks in the heavy construction industry group. Last year, 74% of revenue came from utility and power customers. Its other businesses include pipelines and broadband infrastructure.
The Houston-based company has an IBD Composite Rating of 97. That's only the seventh highest in the group, which underscores the strength in the No. 6-ranked industry out of the 197 industry groups IBD tracks....
....MUCH MORE
Along with GE Vernova, PWR caught a shout-out from Goldman Sachs in May 2024:
Goldman Sachs' Picks For Data Center Electricity Demand Growth
Long-time readers have known Quanta's name for a couple decades as well as that of one of the predecessor companies of electrical cable maker Prysmian S.p.A. (PRY.Milan), General Cable.
New all time high for PRY today, 80.90 euros
The three companies, GEV; PWR, PRY comprise our end-to-end "class act" mini-portfolio for rewiring the world.
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