Company Reports

We are maintaining our $165 per share fair value estimate for no-moat Quanta Services following its first-quarter results. We view Quanta as well-positioned to benefit from the energy transition, but find this more than reflected in its valuation. Hence, we view shares as overvalued.

We increase our fair value estimate to $165 from $138 for no-moat Quanta Services following its fourth-quarter results. The main driver of our fair value increase is Quanta’s improving returns on invested capital, which drives a higher medium-term valuation beyond our explicit forecast. Despite the fair value increase, we continue to view shares as overvalued.

Quanta Services is a leading specialty contractor for customers in the utility, telecom, oil and gas energy, and renewable industries. Its strategic focus is positioning Quanta to take advantage of secular growth trends that drive increased demand for contracting services, such as electric grid investment and renewable energy deployment. The company has historically used acquisitions to supplement organic growth in achieving its strategy.

Clean energy stocks have had a roller-coaster 18 months. Optimism following the passage of the Inflation Reduction Act in August 2022 gave way to rising interest rates in 2023. We highlight three key themes for investors to focus on in 2024: interest rates, U.S. policy, and profitability.

We maintain our $138 fair value estimate for no-moat Quanta Services following its third-quarter results. We continue to like Quanta's end-market exposure and solid execution but consider these already reflected in its valuation and see shares as overvalued.

We raise our fair value estimate for no-moat Quanta Services to $138 per share from $132 following its second-quarter results. The primary driver is an increase in our renewables segment revenue expectations, which are expected to be materially higher than our prior estimate. We continue to like Quanta's end-market exposure and solid execution but consider these already reflected in its valuation and see shares as overvalued at current prices.

Quanta Services is a leading provider of specialty contracting services for customers in the utility, telecom, oil and gas energy, and renewable industries. Its strategic focus is positioning Quanta to take advantage of secular growth trends that drive increased demand for contracting services, such as electric grid investment and renewable energy deployment. The company has historically used acquisitions to supplement organic growth in achieving its strategy.

Shares of no-moat Quanta Services have continued their outperformance year-to-date, rising 29% versus 12% for the S&P 500. Over a five-year timeframe, the company’s performance is even more impressive, rising at a 41% annualized pace compared with 11% for the S&P 500. We raise our fair value estimate to $132 per share from $125 after revisiting our long-term growth assumptions, but continue to see shares as overvalued (trading 40% above our fair value estimate).

Quanta Services is a leading provider of specialty contracting services for customers in the utility, telecom, oil and gas energy, and renewable industries. Its strategic focus is positioning Quanta to take advantage of secular growth trends that drive increased demand for contracting services, such as electric grid investment and renewable energy deployment. The company has historically used acquisitions to supplement organic growth in achieving its strategy.

We maintain our $125 fair value estimate for no-moat Quanta Services following its first-quarter results. We continue to like Quanta's end market exposure and solid execution but view these as already reflected in its valuation and see shares as overvalued.

We are raise our fair value estimate for no-moat Quanta Services to $125 from $116 per share following its fourth-quarter results and 2023 outlook. Our fair value raise is driven by an increase to our revenue forecast over the next few years, particularly within the electric power and renewable infrastructure segments. We continue to like Quanta's end market exposure and solid execution, but view these as already reflected in its valuation. We see shares as overvalued.

Quanta Services is a leading provider of specialty contracting services for customers in the utility, telecom, oil and gas energy, and renewable industries. Its strategic focus is positioning Quanta to take advantage of secular growth trends that drive increased demand for contracting services, such as electric grid investment and renewable energy deployment. The company has historically used acquisitions to supplement organic growth in achieving its strategy.

We have raised our fair value estimate for Quanta Services to $116 per share from $112 following third-quarter results. The primary driver of the increase was higher revenue expectations in the company's electric power segment based on outperformance year to date. Quanta continues to be exposed to favorable trends related to grid investment and renewable energy adoption, but we view these as already priced into the shares.

Quanta Services is a leading provider of specialty contracting services for customers in the utility, telecom, oil and gas energy, and renewable industries. Its strategic focus is positioning Quanta to take advantage of secular growth trends that drive increased demand for contracting services, such as electric grid investment and renewable energy deployment. The company has historically used acquisitions to supplement organic growth in achieving its strategy.

We raise our fair value estimate for Quanta to $112 per share from $102 following second-quarter results. The primary drivers behind our fair value estimate increase are higher revenue expectations on outperformance year-to-date and potential upside from proposed legislation.

Quanta Services is a leading provider of specialty contracting services for customers in the utility, telecom, oil and gas energy, and renewable industries. The company’s strategic focus is positioning Quanta to take advantage of secular growth trends that drive increased demand for contracting services, such as electric grid investment and renewable energy deployment. The company has repeatedly used acquisitions to supplement organic growth in achieving its strategy.

Less than two weeks after seemingly ending prospects of a climate spending bill, Sen. Joe Manchin and Senate Democrats announced support for the Inflation Reduction Act of 2022. While not final, the chances of ultimate passage appear high based on industry reports.

On July 14, U.S. Sen. Joe Manchin, Democrat from West Virginia, indicated that he would not support a reconciliation package with additional climate incentives, seemingly ending the uncertainty of much of the past year. The rumored clean energy package had recently been pegged at around $300 billion and included extensions of existing tax credits for wind and solar as well as potential credits for newer technologies, such as hydrogen, stand-alone energy storage, and support for existing nuclear plants. Incentives for domestic solar manufacturing and electric vehicles were also contemplated.

Solar stocks are set to jump on June 6 after reports the Biden administration will announce actions to alleviate uncertainty associated with tariffs on imported solar panels. The Biden administration is expected to provide a two-year halt to new solar tariffs, allowing much-needed near-term certainty for developers. We note many industry participants have delayed projects as they awaited clarity on the tariffs. Additionally, Biden plans to use the Defense Production Act to provide support for U.S.-made solar panels. We view these actions as aimed at balancing continued buildout of solar projects in the near term to support decarbonization goals, while looking to increase U.S. solar manufacturing over time.

We maintain our $102 fair value estimate for Quanta Services following first-quarter results. Our no-moat rating is also unchanged.