FBR Capital Cuts Price Target on Dycom Industries (DY) Following 1Q
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FBR Capital maintained an Outperform rating on Dycom Industries (NYSE: DY), and cut the price target to $115.00 (from $121.00), following the company's 1Q earnings report. Following Dycom Industries' in-line results, FBR adjusted 2017 estimates to account for guidance related to Google and Goodman. FBR reduced revenue estimates to $3,004M (from $3,060M). Adjusted EBITDA estimates were cut to $446M (from $454M), and adjusted EPS of $5.10 was cut from $5.15.
Analyst Alex Rygiel commented, "Last night, DY announced F1Q17 results that were in line with our and consensus estimates and within management's guidance. DY's top five customers represented almost 75% of revenue and grew 39.5% organically, including AT&T and Comcast, which were up 72% and 52% organically, respectively. However, the stock is down 21% on some noise created by an unnamed customer, which we assume is Google, and the recent acquisition of Goodman, both of which in combination will account for less than 5% of FY17 revenue. The opportunities within DY's core business remain as strong as ever. We expect the company will be in the market buying back stock in the next couple of days under its $100M authorization. And we would not be surprised to see another authorization put in place. The noise created by Google and Goodman is just that, noise. Now with both mostly out of the model, we believe the company is set up for steady growth as multiyear fiber deployments accelerate, CAFII spending continues, and recent consolidation announcements could drive more customer spending and share gain opportunities for DY. We are lowering our price target to $115 (from $121) and reiterate our Outperform rating."
Shares of Dycom Industries closed at $92.95 yesterday.
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