Stifel GMP on Friday downgraded its rating on the share of Aecon Group (ARE.TO) to hold from buy and lowered its price target to C$19.00 from C$31.00 following fourth-quarter results from the engineering and design company.
"Aecon's top line performance in 4Q was robust, and we expect strong revenue growth in 2025E. However, our consolidated EBITDA margin assumptions have been pared back by 80/90 bps in 2025E and 2026E, to reflect weaker performance in the company's Joint Venture operations. We have pared back our SOTP methodology to 5.5x 2026E EV/EBITDA for the Construction business (prior: 6.0x) and continue to value equity income at 14.0x. As a result, our target price falls to $19.00/sh from $31.00/sh. We are downgrading our rating to HOLD given the 5.7% implied return. We believe the stock performance likely will remain sideways for the next 9-12 months given the lack of catalysts," analyst Ian Gillies wrote.
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