Stifel Raises Price Target on MasTec (MTZ) After Meeting with Management
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Stifel reiterated a Buy rating on MasTec (NYSE: MTZ), and raised the price target to $40.00 (from $35.00), after meeting with management. In conjunction with its 3Q conference call, MasTec announced that it has been awarded the Rover and Diamond Pipelines. These jobs are expected to be in backlog at year-end 2016. The company also expressed an incrementally more cautious view on the Communications business and emphasized that current, very strong growth is not sustainable.
Analyst Noelle Dilts commented, "This week, we met with MasTec’s management team at the company’s annual sell-side analyst dinner. We came away with the impression that CEO Jose Mas anticipates strong or meaningfully improved results across all of the company’s platforms in 2017. We see a very strong outlook for the Oil & Gas division, given last week’s announcement that MasTec has been awarded roughly 85% of the Rover pipeline. We estimate the contract value at $1.3 to $1.4 billion, making this the largest job in the company’s history. While management continues to express some incremental caution on the Communications business, given the pending AT&T/ Time Warner deal, we see a relatively low risk of near-term disruption and believe that the deal will likely drive network investment over the long term. On the heels of this meeting and last week’s 3Q report, we are raising our 2017 and 2018 estimates. Our target goes to $40 from $35."
Shares of MasTec closed at $34.75 yesterday.
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