Ameresco's (AMRC) 2025 adjusted earnings before interest, taxes, depreciation, and amortization guidance is likely to be lower than expected, driven by potential deterioration in federal contracts under the Trump administration's streamlining efforts, UBS said Tuesday.
UBS said it sees "downside risk" to 2025 adjusted EBITDA guidance, as well as "further downward" revisions for 2026 to 2027 consensus estimates. The firm said its 2026-2027 adjusted EBITDA estimates are now 11% below Street estimates.
"In our view, the Trump administration is still in the early stages of efforts to streamline the Federal government and while the ultimate outcome is unclear, we believe a further deterioration in the contracting environment for [Ameresco's] federal projects (20-30% of revenue) is highly probable," UBS said.
While Ameresco's stable earnings stream remains attractive within the brokerage's Clean Energy coverage, heightened federal uncertainty makes the risk/reward balance unfavorable, according to the note.
UBS downgraded its rating on Ameresco to sell from buy and lowered its price target to $8 from $37.
Shares of Ameresco were down 5.4% in recent Tuesday trading.
Price: 10.00, Change: -0.57, Percent Change: -5.35
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